The court pointed out that the higher education exception in section 72(t) of the code only applies to individual retirement accounts (IRAs) and not to qualified plans such as the defined benefit plan from which the participant withdrew.
According to the court opinion, the code section states that the 10% early withdrawal penalty does not apply to distributions from an individual retirement plan used for higher education expenses. According to the court “individual retirement plan” is defined as an IRA.
The participant, Stephanie Barbee, pled to the court that she was told by agents and employees of the IRS that the distribution would not be subject to the additional tax. The court said the “law was well settled” that it was not bound by erroneous representations of agents or employees.
Additionally, Barbee told the court that she had IRAs from which she could have withdrawn the money and asked that the court apply the distribution to one of these accounts. The court said it did not have the authority to do that and Barbee was bound by the action she had already taken.
The summary opinion is here .