72(t) hypothetical
If a client started a 72(t) at 57. At age 60 1/2 breaks the 72(t), pays penalties, etc. Does the 72(t) lapse at that point or is the client still taking the 72(t) for another 1 1/2 years?
If a client started a 72(t) at 57. At age 60 1/2 breaks the 72(t), pays penalties, etc. Does the 72(t) lapse at that point or is the client still taking the 72(t) for another 1 1/2 years?
Permalink Submitted by Alan Spross on Wed, 2008-09-10 22:38
Yes, the plan terminates.
When a plan is busted it is also terminated with penalties and interest due on all distributions taken under the plan prior to age 59.5. The penalty stops for any distributions taken after age 59.5. Of course, if the plan is busted after 59.5, there is no need to start a new one.