Ed Zollars, CPAThe taxpayer misinterpreted an article he read online and excluded his §401(k) distribution from income. The IRS and Tax Court corrected his error.
Taxpayer's Diabetes Did Not Qualify Him to Escape Either Taxation on Retirement Plan Distribution or 10% Tax on a Premature Distribution — Current Federal Tax Developments
In the case of Lucas v. Commissioner , T.C. Memo. 2023-9, a taxpayer found that his diabetes diagnosis did not either cause his distribution from a §401(k) plan to be exempt from the regular income tax nor exempt it from the 10% tax on a premature distribution under IRC §72(t).