What Happens If I Break the 72(t) Payment Plan?

By Beverly DeVeny and Jeffrey Levine
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This week’s Slott Report Mailbag, proudly sponsored by GoldCo Precious Metals, examines the 72(t) process and answers a question on the IRA distribution rules between the ages of 59 ½ and 70 ½. As always, we recommend that you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here.


Hi Ed and Company,

I was wondering if you could answer a question. I am 54 years old and need to withdraw funds from my traditional IRA account since I’m in need of additional money in order to supplement my income. Since utilizing the 72(t) option in order to avoid paying the 10% penalty on traditional IRA funds that are withdrawn prior to age 59 ½ is a valid option, my question is as follows:

Once I choose one of the 3 methods in order to determine the exact amount that I would be required to withdraw for a minimum of 5 years, what would happen if after year 1, I’m unable to stick to the plan and have to withdraw “more” than what the 5-year plan permits?  Would the 10% penalty apply only to the amount that I withdrew in excess of what the 5-year plan dictated?  Or would the 10% penalty apply to the entire amount of my withdrawals to-date?  And what happens to my 5-year periodic payment plan at that point in time?

I appreciate your response. I’m a big fan.

Once you choose a 72(t) method, it cannot be changed until the later of attainment of age 59 ½ or five years from the date of the first distribution. If you change the amount of the distributions, all distributions made prior to age 59 ½ become subject to the 10% penalty. But it gets even worse. It is assumed you owed that penalty in the year you took the distribution, so interest is added for each year that you did not pay the penalty.

Once you “break” the schedule, it cannot be continued. In the following year you can set up a new schedule.


If I make a regular (normal) withdrawal from a Traditional IRA (i.e. I am older than age 59 ½ and under 70 years of age), must I then continue to make an annual withdrawal or can I just withdraw funds at will in subsequent years? Please advise. I would greatly appreciate an answer to this question as I am having difficulty obtaining an answer.

Thanks much,


Janette – have no fear, we are here to help. The years between 59 ½ and 70 ½ are the years with no distribution rules. You can take as little or as much as you want in any given year. Each year is independent of the other years so you can take money out at age 60 and nothing more until 70 ½. You will owe income tax on all pre-tax amounts that you withdraw each year.

This week’s Slott Report Mailbag is sponsored by:
GoldCo Precious Metals
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