- 3 - expenses of petitioner’s daughter under section 72(t)(2)(E), and, therefore, the section 72(t) addition to tax was not applicable to that portion of the distribution. The remainder of the pension plan distribution, or $30,440, was determined to be subject to the section 72(t) additional tax for the reason that petitioner did not substantiate that this portion of the distribution was used for higher education expenses. At trial, respondent’s position was that no portion of the $67,552.64 early distribution qualified for higher education expenses for the reason that the pension plan of the school system was not in the category of qualified plans as to which the provisions of section 72(t)(2)(E) are applicable. The parties stipulated, as noted above, that the school system plan was qualified under section 403(b).2 Section 72(t)(1) imposes an additional tax on distributions from a “qualified retirement plan” equal to 10-percent of the portion of such amount that is includable in gross income unless the distribution comes within one of several statutory exceptions. For purposes of the 10-percent additional tax, a 2Even though respondent’s position at trial was that no portion of the $67,552.64 early withdrawal was subject to exclusion from the sec. 72(t) additional tax, counsel for respondent stated that respondent would not move to increase the deficiency to apply the sec. 72(t) additional tax to the $37,112.64, which was allowed as a higher education expense prior to issuance of the notice of deficiency.Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011