- 4 - Accordingly, we need not decide whether section 7491(a) applies in this case.1 Section 72(t)(1) imposes an additional tax on an early distribution from a qualified retirement plan equal to 10 percent of the portion of the amount which is includable in gross income. A qualified retirement plan includes a section 401(k) plan. See secs. 401(a), (k)(1), 4974(c)(1). Petitioners do not dispute that the unpaid balance of the loan from the section 401(k) plan was an early distribution which was includable in gross income. The 10-percent additional tax does not apply to certain distributions, including distributions: (1) To an employee age 59-1/2 or older; (2) on account of the employee’s disability; (3) as part of a series of substantially equal periodic payments made for life; (4) to an employee after separation from service after attainment of age 55; (5) to an employee for medical care; or (6) to an alternate payee pursuant to a qualified domestic relations order. Sec. 72(t)(2). Petitioners do not argue that they satisfy any of the enumerated exceptions under section 72(t)(2). Instead, petitioners contend that the additional tax should not apply 1 Pursuant to sec. 7491(c), the Commissioner bears the burden of production with respect to any penalty, addition to tax, or additional amount. Even if the $2,338 additional tax under sec. 72(t) is an “additional amount” for which respondent bears the burden of production, respondent has met such burden by showing that petitioner received the distribution when he was 53 years old. See Milner v. Commissioner, T.C. Memo. 2004-111 n.2.Page: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011