Common use of Exceptions for Taxation of Non-Qualified Clause in Contracts

Exceptions for Taxation of Non-Qualified. The 10% additional tax does not apply to distributions: • Made to a Designated Death Beneficiary (or to the estate of a Designated Beneficiary) after the death of the Designated Beneficiary; • Attributable to the Designated Beneficiary becoming disabled within the meaning of Code Section 72(m)(7); or • Made on account of scholarship payments or other allowances given to the Designated Beneficiary so long as the distribution does not exceed the amount of the scholarship payments or other allowances.

Exceptions for Taxation of Non-Qualified. The 10% additional tax does not apply to distributions: •  Made to a Designated Death Beneficiary (or to the estate of a Designated Beneficiary) after the death of the Designated Beneficiary; •  Attributable to the Designated Beneficiary becoming disabled within the meaning of Code Section 72(m)(7); or •  Made on account of scholarship payments or other allowances given to the Designated Beneficiary so long as the distribution does not exceed the amount of the scholarship payments or other allowances.