72t SEPP Calculator
Calculate IRC §72(t) Substantially Equal Periodic Payments (SEPP) — penalty-free early IRA withdrawal before age 59½. Three IRS-approved methods. Required to continue 5 years or until 59½, whichever is later.
What Is 72(t) SEPP?
Internal Revenue Code §72(t) allows IRA withdrawals before age 59½ WITHOUT the 10% early withdrawal penalty, IF you take 'Substantially Equal Periodic Payments' (SEPP) for the longer of 5 years OR until age 59½. Used by early retirees, FIRE community, or anyone facing extended unemployment to access retirement funds penalty-free.
The Three IRS-Approved Methods
(1) Required Minimum Distribution Method: account balance ÷ life expectancy factor. Lowest annual amount. Recalculates annually. (2) Fixed Amortization: account balance amortized over life expectancy at IRS interest rate (~5% in 2026). Fixed annual amount. (3) Fixed Annuitization: account balance × annuity factor at IRS rate. Highest annual amount. Choose method based on cash needs — once chosen cannot change without penalty (except one-time switch from amortization/annuitization to RMD method).
The 5-Year / 59½ Rule
Must continue payments for the LONGER of: 5 years from first distribution, OR until age 59½. Modify the schedule, take extra, miss a year = ENTIRE SEPP plan disqualified retroactively. Full 10% penalty + interest on all distributions back to start. Common trap: emergency requires extra withdrawal in year 3 = busts SEPP and triggers $30K+ penalty assessment.
When 72(t) Makes Sense
Best fits: (1) Early retirees age 50-58 with no other liquid assets. (2) Need stable predictable income from large IRA. (3) Can survive without dipping into IRA beyond SEPP amount. Worst fits: (1) Need irregular larger withdrawals. (2) Have other accessible savings — better to spend those first. (3) Under age 50 — long lock-in commitment until 59½. Always model with CPA and document the calculation method chosen.
Sources: IRC §72(t), Rev. Rul. 2002-62 (SEPP methods). Last updated: May 2026. Not tax advice.
Frequently Asked Questions
What is the 72(t) rule?
IRC section allowing penalty-free IRA withdrawals before 59\u00bd if you take Substantially Equal Periodic Payments for longer of 5 years or until 59\u00bd.
Which method should I choose?
RMD method: lowest annual amount, recalculates yearly. Amortization: fixed annual, highest predictability. Annuitization: highest annual amount. Choose based on cash needs.
What if I need more money?
Don't take more. Modifying the plan disqualifies it retroactively \u2014 10% penalty on ALL prior withdrawals plus interest. One-time switch allowed from amortization/annuitization to RMD method.
Can I do 72(t) on 401(k)?
Generally no \u2014 must roll over to IRA first (or be separated from service). Once IRA, set up SEPP. 401(k) rule of 55 is separate exception for those who leave job at 55+.
Is this tool free?
Yes. 100% free, no sign-up. All math runs in your browser \u2014 your IRA data never leaves your device. Not tax advice \u2014 consult CPA.