The IRS Is Unforgiving with a 72t Distribution Penalty
Once 72(t) payments begin, they cannot be stopped or modified for any reason. If payments are modified in any way other than due to death or disability of the IRA owner, a 10% Federal Income Tax penalty plus interest will be retroactively applied to the payments beginning with the first year of the distributions/payments.
The substantially equal period payments must generally continue for at least five full years, or if later, until age 59 ½. For example, if you began taking payments at age 56 on December 1, 2017, you may not take a different distribution or alter the amount of the payment until December 1, 2022, even though your fifth payment was taken on December 1, 2021.
If you begin taking substantially equal periodic payments on December 1, 2017, and you turn 59 ½ on July 1, 2022, you may not take a different distribution or alter the amount of the payment until July 1, 2022.
This means that if you are in year #4 of taking 72(t) payments and you violate the rules, you will have to pay this 10% tax penalty (and interest) on the entire amount you have withdrawn over the first (3) years and not just on the amount you violated in year #4 of your 72(t) commitment.