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over into any other qualified plan within the 60-day grace period
allowed by section 402(c).1
On August 27, 1999, Ms. Seidel signed cashier’s checks as
follows:
Check No. Payee Amount
2016074195 Lee Seidel $10,000.00
2016074191 First Community
Financial Services 1$24,159.66
2016074192 First Community
Financial Services 1$6,847.46
1These check payments made to First Community Financial
Services were made to pay off the principal balance of a second
mortgage on petitioner’s house, which was a liability assumed
during petitioner and Ms. Seidel’s marriage, and as such was a
joint liability, and to pay off another unspecified joint
liability.
However, Ms. Seidel reported only $30,030 of the $77,000
pension distribution on her 1999 Federal income tax return. This
amount represents one-half of the net distribution from
petitioner’s CWSC 401(k) plan. In the notice of deficiency
mailed to Ms. Seidel respondent determined that she failed to
report the additional $46,970 distribution from New York Life
from petitioner’s CWSC 401(k) plan.
1Although a qualified pension plan is exempt from taxation
under sec. 501(a), any amounts actually distributed from such a
plan generally must be included in the distributee’s gross
income. Sec. 402(a). In order to avoid the tax consequence of a
plan distribution, the distributee may “roll over” the amount of
the distribution into another eligible plan within 60 days. Sec.
402(c).
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Last modified: May 25, 2011