Recapture tax plus interest

L1: Recapture tax plus interestI know you’re the expert on avoiding the 10% penalty but can you help with the calculation?My client took 2 SEPP payments from his large IRA; one in 2000 and one in 2001. The IRA can no longer support withdrawals at that level based on the stock market decline. In addition, he turns 59.5 next year and wants to take payments as needed after attaining the magic age.My research says he owes a 10% penalty for 2000 and 2001 and files Form 5329 to report it. I also understand that he owes interest on the penalty because he did not follow through on his 72(t) regime.When must the penalty be assessed? Can he file Form 5329 before he files his 2002 return? What period does the “interest” cover? I can’t find anyone who has had to make this calculation.Thanks for any help you can provide.2001-12-04 19:27, By: Mary Kay, IP: [127.0.0.1]
L2: RE: Recapture tax plus interestForm 5329 states that the forms should be filed with, or at the same time, as the 1040. Note that different versions of the forms may be required for different years. The 10% penalty is calculated on the form. I’m sure the IRS will compute the amount of any back interest owed on the penalty. I’m guessing, but there should probably be only a year of interest based on the 2000 penalty.2001-12-05 08:21, By: Gfw, IP: [127.0.0.1]

L2: RE: Recapture tax plus interestWhy would there only be one year’s interest? The modification occurs in 2002 because payments cease that year. The 10% penalty applies to 2000 and 2001; I assume that the Form 5329 is attached to the 2002 Form 1040.2001-12-10 22:15, By: Mary Kay, IP: [127.0.0.1]

L2: RE: Recapture tax plus interestThe 10% penalty for 2000 was due with the 2000 return in April 2001. The 10% penalty for 2001 would be due with the 2001 tax return which I was assuming would be paid when due. Therefore, only the first penalty should have late payment penalties. Just my thoughts, I’m not an accountant.2001-12-11 04:28, By: Gfw, IP: [127.0.0.1]