Linda L. Domanico and Anthony M. Domanico - Page 10

                                        - 9 -                                         
          Domanico used her 401(k) plan distribution for a commendable                
          purpose; i.e., to pay for higher education expenses, the                    
          distribution does not qualify for the higher education expenses             
          exception under section 72(t)(2)(E) because the distribution was            
          not from an IRA.  Although the common retirement-oriented purpose           
          of a 401(k) plan and an individual retirement plan may have led             
          petitioners to a “finite misinterpretation” based on their                  
          reading of the Master Tax Guide, a 401(k) plan and an individual            
          retirement plan are separate and distinct in that only                      
          withdrawals from an IRA may qualify for this exception.6  See               
          secs. 72(t)(2)(E), 401(k), 408(a), and (b).  The distinction                
          between the two for purposes of section 72(t)(2)(E) may appear to           
          exalt form over substance, but it is a distinction that is                  
          legislatively mandated.                                                     
               In closing, we think it appropriate to observe that we found           
          petitioners to be very conscientious taxpayers who obviously take           
          their Federal tax responsibilities quite seriously.  We recognize           
          that the difference between a qualified retirement plan and an              

          attributable to an employee’s being disabled, or (3) made to an             
          employee after separation from service after attainment of age of           
          55) apply in this case.                                                     
               6  In contrast to petitioners’ “finite misinterpretation”,             
          we note that par. 2179 of the Master Tax Guide is consistent with           
          the statutory language in that it identifies education expenses             
          as an additional exception that applies “when early distributions           
          are made from an IRA”.                                                      

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011