72t payments


Q. If I take 5 percent or the maximum interest my retirement plan provides, does this violate the 72t definition of reasonable interest rate, and would I end up paying the 10 percent penalty?

A. 72t distributions must be computed using one of three specific formulas, and the rules are strict. Anything else will not qualify for the exemption. You should work with a qualified tax adviser before initiating any payments.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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