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Respondent subsequently issued to petitioner a statutory
notice of deficiency for 2003. Respondent determined that
petitioner is liable for a 10-percent additional tax on the
distribution under section 72(t), because she received the
distribution prematurely.
Discussion
Section 72(t)(1) generally imposes a 10-percent additional
tax on premature distributions from “a qualified retirement plan
(as defined in section 4974(c))”, unless the distributions come
within one of the statutory exceptions under section 72(t)(2).
The parties do not dispute that petitioner’s 401(k) account was a
qualified retirement plan.
The legislative purpose underlying the section 72(t) tax is
that “premature distributions from IRAs frustrate the intention
of saving for retirement, and section 72(t) discourages this from
happening”. Arnold v. Commissioner, 111 T.C. 250, 255 (1998)
(quoting Dwyer v. Commissioner, 106 T.C. 337, 340 (1996)); S.
Rept. 93-383, at 134 (1974), 1974-3 C.B. (Supp.) 80, 213. The
Court has repeatedly held that it is bound by the statutory
exceptions enumerated in section 72(t)(2). See, e.g., Arnold v.
Commissioner, supra at 255-256; Schoof v. Commissioner, 110 T.C.
1, 11 (1998). Petitioner has not shown that she comes within any
of the exceptions to the 10-percent additional tax under section
72(t)(2).
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Last modified: May 25, 2011