- 5 -
T.C. 337, 340 (1996); see also S. Rept. 93-383, at 134 (1973),
1974-3 C.B. (Supp.) 80, 213.5
The 10-percent additional tax does not apply to certain
distributions, including distributions: (1) To an employee age
59-1/2 or older; (2) on account of the employee’s disability; (3)
as part of a series of substantially equal periodic payments made
for the employee’s life (or life expectancy); or (4) to an
individual from an IRA which are qualified first-time home buyer
distributions.6 Sec. 72(t)(2)(A)(i), (iii), and (iv), (F).
Petitioner does not dispute that the $86,333.33 distribution
from his IRA was an early distribution from a qualified
retirement plan. Indeed, petitioner properly included the
distribution in gross income.7
5 At trial, petitioner accurately described his IRA as an
account “for my retirement.” This is precisely why a
preretirement distribution is generally subject to the 10-percent
additional tax and why there are relatively few exceptions. “The
legislative purpose underlying the section 72(t) tax is that
‘premature distributions from IRA’s 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).
6 For purposes of sec. 72(t), the term “employee” includes
(in the case of an individual retirement plan) the individual for
whose benefit the plan was established. Sec. 72(t)(5).
7 Generally, a distribution from an IRA is includable in
the distributee’s gross income in the year of distribution under
the provisions of sec. 72. See sec. 408(d)(1); see also sec.
61(a)(9), (11); Arnold v. Commissioner, supra at 253.
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