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Discussion
Under section 72(t), a 10-percent additional tax is imposed
on early distributions from a qualified retirement plan for the
taxable year in which the taxpayer receives the early
distribution. Petitioner does not dispute that she received an
early distribution from a qualified retirement plan in 2002.
The 10-percent additional tax, however, does not apply to
certain distributions. Sec. 72(t)(2). Section 72(t)(2)(E)
provides that the 10-percent additional tax on early
distributions does not apply to “Distributions to an individual
from an individual retirement plan to the extent such
distributions do not exceed the qualified higher education
expenses * * * of the taxpayer for the taxable year.” An
individual retirement plan is defined as an individual retirement
account and an individual retirement annuity (collectively IRA)
described in section 408(a) and (b), respectively.
Sec. 7701(a)(37). Qualified higher education expenses for
purposes of section 72(t)(2)(E) are defined by section 529(e)(3).
Sec. 72(t)(7)(A).
The parties stipulated that petitioner’s distribution was
from an IRA. Additionally, respondent concedes that petitioner
incurred qualified higher education expenses in 2003 and 2004.
Petitioner contends that the higher education expenses incurred
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Last modified: May 25, 2011