Charlotte and Charles T. Gee - Page 6

                                        - 6 -                                         
          redesignated the IRA as her own.  She did not need to                       
          “redesignate” the IRA.  The IRA was her previously existing                 
          account.  We therefore find no merit to petitioner’s argument               
          that the rolled over funds retain their character because she did           
          not redesignate her IRA.                                                    
               Petitioner rolled over the entire amount received from her             
          deceased husband’s IRA into her own IRA.  Petitioner is and was             
          the sole owner of her separately created IRA.  The distribution             
          petitioner received was not occasioned by the death of her                  
          deceased husband nor made to her in her capacity as beneficiary             
          of his IRA.                                                                 
               Petitioner cannot have it both ways.  She cannot choose to             
          roll the funds over into her own IRA and then later withdraw                
          funds from her IRA without additional tax liability because the             
          funds were originally from her deceased husband’s IRA.                      
          Accordingly, once petitioner chose to roll the funds over into              
          her own IRA, she lost the ability to qualify for the exception              
          from the 10-percent additional tax on early distributions.  The             
          funds became petitioner’s own and were no longer from her                   
          deceased husband’s IRA once petitioner rolled them over into her            
          own IRA.  The funds therefore no longer qualify for the                     
          exception.                                                                  
               The section 72(t) tax discourages premature IRA                        
          distributions that frustrate the intention of saving for                    
          retirement.  Dwyer v. Commissioner, 106 T.C. 337, 340 (1996); see           
          also S. Rept. 93-383, at 134 (1974), 1974-3 C.B. (Supp.) 80, 213.           
          To avoid the section 72(t) additional tax, petitioner must show             
          that the IRA distribution falls within one of the exceptions                




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

Last modified: May 25, 2011