Court order in separation barring 72t distribution

L1: Court order in separation barring 72t distributionIf a court order requires the 72t distributions to cease during the separation of a couple, does that make the distributions before and after subject to the 10% penalty? The couple is under the age of 591/2 and no distributions have been made since the court order barred them. The divorce is final and the separate partyis now wanting to begin the distributions again…Thanks, AT & T2005-12-08 16:30, By: AT & T, IP: [66.184.212.209]
L2: Court order in separation barring 72t distributionThere have been several PLRs issued on the subject of divorce. Start by looking in oour FAQ for…
Q. If I get divorced and transfer a portion of the payments to my ex-spouse, will I loose the exemption from the 10% penalty tax?
After reviewing available information, cionsult your tax-advisor for his/her advice.
2005-12-08 16:35, By: Gfw, IP: [172.16.1.72]

L2: Court order in separation barring 72t distributionHello AT&T:
Federal law & therefore the IRS really don’t care what a state court judge does; such as issue a restraining order on the continuation of 72(t) distributions. Therefore, the cessation of distributions would be a modification; therefore, life-to-date distributions would be retroactively surtaxed. However, a semi-intelligent attorney for the SEPP party would point this out to the judge making two arguments:
1. Cessation of the distributions causes an unnecessary dissapationof the marital estate & should therefore not be ordered.
2. If necessary, the distributions should be made to a court ordered trust account thus continuing the distributions; however, the money is placed under court supervision such that neither party to the divorce can get at those dollars.
TheBadger
wjstecker@wispertel.net
P.S. If this is water over the dam then I suggest you immediately seek competent counsel to hopefully figuer a way out.
2005-12-12 10:01, By: TheBadger, IP: [66.250.23.21]