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entity.” Respondent contends that the $76,087 is a distribution
subject to the section 72(t) additional tax.
Section 72(t) imposes a 10-percent additional tax on early
distributions from qualified retirement plans, unless an
exception applies. Section 72(t)(2)(A)(iv) is the only relevant
exception here.
Section 72(t)(2)(A)(iv) provides that the 10-percent
additional tax shall not apply to distributions which are “part
of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy)
of the employee or the joint lives (or joint life expectancies)
of such employee and his designated beneficiary”.
Petitioners contend that “The lump sum distribution received
by Petitioner was part of a series of substantially equal
periodic payments based upon his life expectancy that were
accumulated monthly from July 1, 1991 to July 1, 1994.”
Unfortunately, petitioners focus on the contributions made to the
pension plan, not on the payments made from the plan.
We find that the lump-sum distribution does not satisfy the
requirements of the exception under section 72(t)(2)(A)(iv). The
lump-sum distribution was a one-time payment. The lump-sum
distribution was not part of a series of substantially equal
periodic payments made not less frequently than annually. On
this record, we conclude that the lump-sum distribution is
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Last modified: May 25, 2011