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from the early distribution to Mr. Sulieman to reimburse him for
losses associated with the Angola Road property. There is no
evidence in the record that suggests the early distribution was
attributable to Mr. Ahmad’s afflictions. Accordingly, the
exception in section 72(t)(2)(A)(iii) offers no relief to
petitioners.
Petitioners also maintain that the section 72(t) penalty is
inapplicable because Mr. Ahmad was a student at the University of
Toledo in 2001. Under section 72(t)(2)(E), the 10-percent
addition to tax does not apply to distributions from individual
retirement plans for higher education expenses. An individual
retirement plan is an individual retirement account (IRA) or an
individual retirement annuity. Sec. 7701(a)(37). In this case,
Mr. Ahmad received an early distribution from the Ohio PERS,
which is a “qualified retirement plan” under section 4974(c).
Freese v. Commissioner, T.C. Memo. 1996-224. Since Mr. Ahmad
received his distribution from a qualified retirement plan rather
than an individual retirement plan, the section 72(t)(2)(E)
exception is unavailable to petitioners.
Finally, petitioners argue that the section 72(t) penalty
should be waived because Mr. Ahmad’s PERS pension was considered
marital property by the Court of Common Pleas. Payments to
alternate payees pursuant to a qualified domestic relations order
are not subject to the section 72(t) addition to tax. Sec.
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