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amount actually distributed to any distributee by any
employees’ trust described in section 401(a) which is exempt
from tax under section 501(a) shall be taxable to the
distributee, in the taxable year of the distributee in which
distributed, under section 72 (relating to annuities).
Under section 402(a), the general rule is that a distribution
from an exempt employees’ trust (under a tax-qualified employees’
plan) is taxed to the “distributee” under section 72, which
generally provides for current taxation of distributions as
ordinary income.
The Code does not define the word “distributee” as used in
section 402(a), neither do the regulations. The Court has
concluded that a distributee of a distribution under a plan
ordinarily is the participant or beneficiary who, under the plan,
is entitled to receive the distribution. See Darby v.
Commissioner, 97 T.C. 51, 58 (1991); Estate of Machat v.
Commissioner, T.C. Memo. 1998-154; Smith v. Commissioner, T.C.
Memo. 1996-292.
Section 402(e)(1)(A), however, provides an exception to this
general rule. Section 402(e)(1)(A) provides that an “alternate
payee” who is the spouse or former spouse of the plan participant
shall be treated as the distributee of any distribution or
payment made to the “alternate payee” under a “qualified domestic
relations order” as defined in section 414(p). Therefore, a
distribution made to such an alternate payee under a QDRO will be
taxable to the alternate payee, and not to the plan participant,
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