- 5 - not, at the time of the contributions, treated as taxable income to the employees. However, distributions from the annuity accounts to the employees are treated as taxable income to the employees in the year of the distributions. Sec. 403(b)(1) (flush language); sec. 72(a). As indicated, respondent takes the position that the $15,422 petitioner received from her annuity accounts prior to petitioner attaining the age of 59-1/2 is also subject under section 72(t) to a 10-percent additional tax. Petitioner argues that the distributions she received from her annuity accounts are governed not by section 72(t) but by section 72(q), under the latter of which no 10-percent penalty or additional tax would apply to the early distributions petitioner received.1 However, as a result of the section 72(t)(1) cross-reference to section 4974(c), annuity accounts established and funded by section 501(c)(3) organizations are explicitly covered by section 72(t), and early distributions from such annuity accounts are generally subject to a 10-percent additional tax. In its 1 Under the sec. 72(q)(2)(E) cross reference to subsec. 72(e)(5)(D), early distributions from annuity accounts established and funded by sec. 501(c)(3) organizations are excepted from the application of the sec. 72(q) 10-percent penalty provided therein on early distributions. See sec. 72(e)(5)(D)(ii)(III).Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011