72(t) question


Q. Situation: Client will run out of funds prior to satisfying the 5 years or 59.5 time frame. What are the consequences? Will the 10 percent penalty be invoked?
A. This is a question for the tax preparer who will prepare the tax return for the year in question. I assume this happened because the account suffered a massive loss in value and could no longer support the fixed withdraw requirement. In that case, I would not expect any penalty to apply.


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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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