72(t) Recapture Penalty

After reading Andy Ives informative piece on June 20th, 2022 (link below) – I have a follow up question. If an account holder does trigger the “recapture penalty” of 10%. Is there additional interest applied to the recaptured penalty amount? I’ve seen different comments regarding this and would like it cleared up.
Thanks,
CJ

https://irahelp.com/slottreport/72t-don%E2%80%99ts



  • I don’t know if the IRS has been consistent with the various penalty applications, but p 39-40 of the following dated but apparently still applicable article would be the most likely scenario for the interest penalty. It states the the applicable federal long term rates for the number of penalty years is averaged, and the computation starts with the current year the plan is busted and works back to the first year.
  • Corel Office Document (retireearlyhomepage.com)
  • I would use this as a likely indication what to expect, but would just file the 5329 and pay the penalty only. The IRS can calculate and bill out the interest if they choose.


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