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underlying reason petitioner surrendered his TSA, however, was
because he was concerned about the financial stability of his
policies due to the changes in the plan’s underwriter rather than
because of a personal financial hardship. In any event, assuming
arguendo that petitioner suffered from a financial hardship, a
hardship distribution from an annuity contract is specifically
excluded as an eligible rollover contribution. Sec.
402(c)(4)(C).
On the basis of the entire record, petitioner did not
satisfy the distribution requirements for an early withdrawal
under section 403(b)(11), and, therefore, petitioner did not
receive an eligible rollover distribution under section
403(b)(8). Accordingly, we conclude that petitioner did not make
a tax-free rollover of the Americo distributions.10
The record is clear that the distributions at issue
resulted from petitioner’s surrender of his annuity policies. As
stated earlier, section 72(e)(5) applies to the surrender of an
annuity contract. See sec. 72(e)(5)(E). Absent exceptions not
applicable in the instant case, the law is well settled that a
distribution upon the complete surrender of an annuity contract
is includable in gross income to the extent the distribution
10 Based on our conclusion, petitioner should be liable for
the sec. 72(t)(1) penalty. We note, however, that this issue is
not before us because respondent did not challenge Americo’s
characterization that sec. 72(t)(1) did not apply.
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