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retirement plans are defined to include IRAs as defined in
section 408(a) and (b). Secs. 72(t)(1), 4974(c). There is no
dispute as to whether petitioner’s IRAs are “qualified retirement
plans” for purposes of section 72(t).
The 10-percent additional tax does not apply to certain
distributions from qualified retirement plans, including
distributions made after an employee attains age 59� and
distributions attributable to the employee’s disability. Sec.
72(t)(2)(A)(i), (iii); see sec. 72(t)(2). For purposes of
section 72, an employee is disabled if she is “unable to engage
in any substantial gainful activity by reason of any medically
determinable physical condition or mental impairment which can be
expected to result in death or to be of long-continued and
indefinite duration.” Sec. 72(m)(7).
Petitioner was born in 1958. The distributions from her
IRAs were made in 1999 and 2000. Because petitioner had not
attained the age of 59� at the time of the distributions, the
exception found in section 72(t)(2)(A)(i) does not apply.
During 1999 and 2000, petitioner was employed by Cypress and
was running her own startup network marketing business. Although
petitioner testified that the condition of her health slowed her
down and forced her to switch from full-time to part-time work
during 2000, petitioner was still able to engage in substantially
gainful activity. See sec. 72(m)(7). Because petitioner was not
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Last modified: May 25, 2011