Wednesday, November 25, 2009
The Tax Court yesterday held that parents who withdrew $110,691 from their IRA were not subject to the 10% early distribution penalty on the portion used to pay their daughter's room and board at Michigan State under the higher education exception of § 72(t)(2)(E)
. But the 10% penalty applied to the remaining portion that was used to pay down their $80,000 credit card debt to avoid bankruptcy because there is no general financial hardship exception in § 72(t)
. Venet v. Commissioner
, T.C. Memo. 2009-268 (Nov. 24, 2009).