Request for info on Additional tax on form 5329

[timmosteller]

I WAS TOLD BY A CLIENT THAT THERE IS A "72 T" WHICH ALLOWS A N EXCEPTION TO THE 10% PENALTY ON FORM 5329. THE CLIENT WAS AGE 57 AT THE END OF 2019. i WAS HOPING TO FIND MORE INFO TO MAKE SURE MY CLIENT QUALIFIES FOR THE EXCEPTION TO THE 10'% PENALTY.. HE WAS SEPARATED FORM SERVICE APPROXIMATELY 3 YEARS AGO. ANY FEED BACK WOULD BE APPRECIATED. THANK YOU. THE ADDITIONAL PENALTY WOULD RESULT IN $46000 IN TAXES.

[Maude Lebowski]

Here's a link that should get you started: https://www.irs.gov/retirement-plans...iodic-payments

[Lion]

That's a lot of tax! How much did he take out during 2019? Has he been taking out substantially equal payments for the last three years? If he did not withdraw any until AFTER he was 55 and after he had left the company, he may not have to use 72t and continue payments until he's 59.5; he may have a different exception. But, start with 72t to see if it fits your client's circumstances.

[DoubleO]

Is distribution from 401K? Was he 55 in the year he separated from service? Is he drawing a series of substantially equal payments? That' usually 72t, but 1099R s/be coded accordingly. Not enough info to really answer your question, but Maude's link should get you started.