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 59½ if you take Substantially Equal Periodic Payments for longer of 5 years or until 59½.
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 — 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 — 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 — your IRA data never leaves your device. Not tax advice — consult CPA.