- 5 -
indicated that the early distribution was not subject to tax
under exception 7 (Individual retirement account (IRA)
distributions made to unemployed individuals for health insurance
premiums) and exception 8 (IRA distributions made for higher
education expenses).
In the notice of deficiency, respondent determined that
petitioners are liable for the 10-percent additional tax on an
early distribution from a qualified retirement plan.
Petitioners timely filed a petition with the Court disputing
the determined deficiency.
Discussion6
Section 72(t)(1) imposes an additional tax on distributions
from a qualified retirement plan equal to 10 percent of the
portion of such amount that is includable in gross income unless
the distribution comes within one of several statutory
exceptions.7
As relevant herein, section 72(t)(2) exempts the following
distributions from the additional tax if the distributions are
made for: (1) Health insurance premiums for an unemployed
individual, sec. 72(t)(2)(D); or (2) qualified higher education
6 We decide the issue in this case without regard to the
burden of proof because the issue is essentially one of law.
7 Although the record does not describe Mr. El-Bibany’s
retirement plan, the parties have proceeded on the basis that the
distribution was from an individual retirement plan within the
scope of sec. 72(t).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011