ID: Office: UILC: CCA_2009040814001550 -------------------------- 72.00-00 Number: 200920052 Release Date: 5/15/2009 From: -------------------- Sent: Wednesday, April 08, 2009 2:00:19 PM To: ---------------------- Cc: -------------------- Subject: RE: 7 2(t) exceptions ----------- There have not been any regulations issued regarding section 72(t)(2)(D). A distribution qualifies under section 72(t)(2)(D) if it was made from an individual retirement plan to an individual after separation from employ me nt: (1) If such individual has received unemploy me nt compensation for 12 consecutive weeks under any Federal or State unemploy me nt compensation law by reason of such separation, sec. 72(t)(2)(D)(i)(I); (2) if such distributio n was made during any taxable year during which such unemploy me nt com pensation is paid or the succeeding taxable year, sec. 72(t)(2)(D)(i)(II); and (3) to the extent such distribution does not exceed the amount paid during the taxable year for insu rance, sec. 72(t)(2)(D)(i)(III). A s elf-employed individual shall be treated as having satisfied the requirement of section 72(t)(2)(D)(i)(I) (number (1) above) if, under Federal or State law, the individual would have received unemployment compensation bu t for the fact that the individual was self-employed. Sec. 72(t)(2)(D)(iii). Thus, if the taxpayer is self-employed, the taxpayer has to present evidence that he would have been eligible to receive any Federal or State unemployment compensation, but for t he fact that the taxpayer was self employed. Although not able to cite as precedence, see the attached Tax Court Summary Opinion 2005-78 and how the Tax Court handled a S case dealing with section 72(t)(2)(D)(iii).