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return. Petitioner did not report the 10-percent additional tax.
Petitioner used the distributions to pay down debt on his
credit cards. He also invested some of the money. Petitioner
did not roll over any portion of the distribution into another
IRA or qualified retirement account. Petitioner did not receive
the distributions on account of a disability, as part of a series
of substantially equal periodic payments made for life, or for
medical care.
Discussion
Section 72(t) provides for a 10-percent additional tax on
early distributions from a qualified retirement plan. “The
legislative purpose underlying the section 72(t) tax is that
‘premature distributions from IRA’s frustrate the intention of
saving for retirement, and section 72(t) discourages this from
happening.’” Arnold v. Commissioner, 111 T.C. 250, 255 (1998)
(quoting Dwyer v. Commissioner, 106 T.C. 337, 340 (1996)).
A qualified retirement plan includes an IRA. See secs.
408(a), 4974(c). It is undisputed that Nationsbank, N.A.,
Franklin Templeton Trust Co. and IDS Life Ins. Co. were qualified
retirement plans.
The 10-percent additional tax does not apply to certain
distributions. Section 72(t)(2) excludes qualified retirement
plan distributions from the 10-percent additional tax if the
distributions are: (1) Made on or after the date on which the
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