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Ending 72t 401k withdrawals early: consequences?

Thos19 234 57 January 29, 2016 at 11:41 AM

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I am very sorry to say that I let a financial planner talk me into a whole life insurance policy which I could not sustain. It was funded 50% by an annual 72t withdrawal from one of my 401k balances.

There have only been two withdrawals of $7300 (gross) each in Aug. 2014 & 2015, each with 20% Federal Tax and 5% State (MA) tax withheld.

I am no longer funding the whole life policy.

I understand the rules of 72t withdrawals in that I have to continue to withdraw a similar amount annually until I am 59 1/2 (I am 47).

Since I have only made 2 withdrawals, do I have the option of paying the additional 10% withdrawal penalty for tax years 2014 and 2015, and end future withdrawal obligations? Would there be additional penalties and interest for tax year 2014?

I know I need to talk to a tax professional about this. Just though I'd pose the question to this group to point me in the right direction.

Thank you all, in advance



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You should also consider placing a formal complaint against the financial planner who talked you into doing such a dumb thing.
Reply Helpful Comment? 1 0
Wow...I heard of scumbag financial planners but this takes the cake. Were they that convincing that you thought this was a good idea?

When are people going to realize that when a "financial planner" recommends any kind of life insurance or annuities...99% of the time they are looking out for their best interest...not yours!

Life insurance is not an investment period!

To answer your questions...I cant find anything related to stopping withdrawals from a 72T. Im sure there are some hefty penalties to say the least. You need to end whatever kind of terrible relationship you have with your adviser.
Reply Helpful Comment? 0 0
Did this financial planner have any kind of certification? If so you need to file a complaint to the appropriate organization because there is no way this could be justified as sound financial advice.
Reply Helpful Comment? 0 0
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