The Difference Between an IRS Late Payment Penalty and Interest
Retirement Answer Man
Roger Whitney, CFP®, CIMA®, RMA, CPWA®
4.6 • 1.2K Ratings
🗓️ 24 September 2025
⏱️ 35 minutes
🧾️ Download transcript
Summary
SHOW NOTES
In this episode, we tackle the often-overlooked topic of taxes in retirement with expert Erin Coe, an enrolled agent. Discover how to avoid unexpected penalties and interest on your IRA distributions and Roth conversions. We also share an inspiring retirement success story from Lottie, reminding us of the importance of clarity and simplicity in planning. Tune in for practical advice that will help you rock your retirement!
OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN
- (00:00) Today Erin Coe joins Roger to talk through penalties and interest during retirement, what those things are.
ROCKIN’ RETIREMENT IN THE WILD
- (01:30) Lottie says she got caught up in ideas about the perfect retirement and it was getting in her way.
PRACTICAL PLANNING SEGMENT WITH ERIN COE
- (03:31) Today we're going to talk about penalties and interest when it comes to taxes.
- (04:52) Erin explains the difference between a tax penalty and interest.
- (11:14) Roger asked Erin how to calculate an estimated quarterly tax if not doing safe harbor?
- (13:55) Erin shares her tips on tax returns.
- (16:08) Being prepared is always better than being taken by surprise when it comes to taxes.
LISTENER QUESTIONS
- (16:40) Roger makes a correction on a past statement.
- (17:25) Jeff asks a question about the pie-cake explainer video.
- (20:30) Dave asks a question about helping his elderly mother with her finances.
- (26:11) Robert asks about getting two mortgages near retirement.
SMART SPRINT
(32:15) Over the next seven days, download the 1040 form and review how it applies to your retirement income. Decide whether you’ll handle taxes through estimated payments, safe harbor payments, or automatic withholdings from distributions.
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Transcript
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| 0:00.0 | If 5% appears too small, be thankful, I don't take it all because I'm the tax man. |
| 0:12.4 | Welcome to the show dedicated to helping you not just survive retirement, but to have the confidence to lean in and create a great life because you have |
| 0:22.9 | clarity on your plan, your retirement plan of record. It's so critical. Something that's clear to |
| 0:29.3 | you. And in that plan of record, you're going to have to account for taxes that will be due |
| 0:36.1 | when you have IRA distributions and do Roth conversions, et cetera. |
| 0:40.6 | And we're so used to having this on autopilot via tax withholding while we're working |
| 0:45.4 | that we can have some unexpected surprises when we retire. |
| 0:50.8 | So today on the show, we're going to have Aaron Coe, a team member. She is a |
| 0:55.6 | enrolled agent, loves the tax code, and it's just an awesome lady. Talk through penalties and |
| 1:04.8 | interest during retirement. What those things are, why we need to account for them, and how to |
| 1:10.7 | avoid some of those unforced air. So Aaron Coe and why we need to account for them, and how to avoid some of those |
| 1:11.8 | unforced air. So Aaron Coe and I are going to have that chat. In addition, we're going to |
| 1:16.8 | share a rocking the retirement wild in the story, as well as I answer some of your questions. |
| 1:22.4 | So let's get this party started. |
| 1:33.8 | First, I want to do a rocking retirement in the wild story from Lottie. I love sharing these real world stories of someone like you figuring it out, figuring out how to rock |
| 1:41.0 | retirement. Lottie emailed me and she said, you absolutely hit the nail |
| 1:45.0 | on the head. And I actually wrote the words in your email down on an index card and set it on my desk. |
| 1:51.4 | And what she's referring to is a conversation we had on a show a few weeks ago where she, I'm going to go |
| 1:57.1 | quote, she wrote down, the core intent of retirement planning is to create a great |
| 2:03.1 | life. We must strive for elegant simplicity in our planning so that we can remain focused on the |
| 2:12.1 | business of living. That's what she wrote down on her index card. And she goes on to say, I definitely got caught up in the loop of ideas about the perfect time, savings, amount, way to retire, all of that stuff getting in my way. |
| 2:28.7 | I just retired this past June and find myself frozen in time. |
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