IRA garnished for child support subject to tax plus penalty.
| Jurisdiction | United States |
| Author | Barton, Peter C. |
| Date | 01 May 1997 |
In Vorwald, TC Memo 1997-15, the Tax Court recently ruled that the garnishment of a taxpayer's individual retirement account (IRA) pursuant to a judgment for child support arrearages was includible in his gross income and subject to the 10% early distribution penalty. Unlike qualified pension plans under Sec. 401, state law determines whether IRAs can be distributed to creditors of the IRA owner.
According to Sec. 408(d)(1), IRA distributions are included in the distributee's gross income as specified in Sec. 72. (There is an exception for amounts rolled over within 60 days.) Sec. 72(e)(2) requires IRA distributions to be included in gross income except to the extent of any nondeductible IRA contributions. Sec...
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