James K. Moyer - Page 6

                                        - 5 -                                         
                                     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).                                                           







Page:  Previous  1  2  3  4  5  6  7  Next

Last modified: May 25, 2011