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Discussion
Section 72(t) provides for an additional tax of 10 percent
on any amount received as an early distribution from a qualified
retirement plan. Notably, the section 72(t) additional tax does
not apply in certain situations, and the situation on which
petitioner’s argument relies is described in section 72(t)(2)(C).
That section provides that distributions from qualified
retirement plans are not subject to the additional 10-percent tax
if they are made pursuant to a QDRO within the meaning of section
414(p)(1).
However, section 72(t)(3)(A) provides that the exception for
distributions pursuant to a QDRO does not apply to distributions
from an individual retirement plan. Sec. 72(t)(2)(C), (3)(A).
The term “individual retirement plan” is defined as an individual
retirement account or an individual retirement annuity. Sec.
7701(a)(37). Assuming arguendo that the Order was, in fact, a
QDRO, the exception provided by section 72(t)(2)(C) is not
applicable because the distribution at issue was made from
petitioner’s IRA.
Therefore, we must sustain respondent’s determination, and
conclude that petitioner is liable for the additional tax of 10
percent on the $11,572 early distribution from his IRA, pursuant
to section 72(t).
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Last modified: May 25, 2011