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I think we are now saying the same thing & I went into great detail over on the REHP. Essentially §408A(d) forces the reinclusion into gross income (so §72(t) can apply) of a distribution within 5 years. Said another way, §408A cuases the same effect as a recharacterization back to a regular/rollover IRA; then apply the tax & the surtax & then give credit for prior taxes paid.

Earlier posts on this whole topic made it appear that some form of double taxation was taking place or that some form of prorata (contributions vs. earnings) was taking place when the 5 year rule was violated.

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