What is a 72(t) SEPP plan?

72(t) refers to the section of the tax code that allows penalty-free early withdrawals from an IRA before age 59½, as long as you take Substantially Equal Periodic Payments using one of three IRS-approved calculation methods, for at least 5 years or until age 59½, whichever is longer.

Which 72(t) method gives the highest payment?

Fixed Amortization and Fixed Annuitization generally produce the highest, and roughly similar, fixed annual payments. The RMD method — recalculated every year — produces the lowest payment but is the only one that adjusts automatically if your account balance changes.

What happens if I modify my 72(t) payments early?

Any modification other than the one-time switch to the RMD method 'busts' the plan. The IRS then retroactively applies the 10% early withdrawal penalty to every distribution you've taken since the plan started, plus interest.

How long does a 72(t) plan have to run?

The longer of 5 years or until you reach age 59½. Someone starting at 50 must run the plan for at least 9.5 years; someone starting at 57 must run it for at least 5 years, since 5 years exceeds the time until 59½.

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Calculator

72(t) SEPP Calculator

Penalty-free early IRA withdrawals — RMD & Fixed Amortization methods.

72(t) SEPP Calculator

Penalty-free early IRA withdrawals — RMD & Fixed Amortization methods.

Input Parameters

Your IRA

IRA Balance

Your Age

Your Current Age

72(t) SEPP is for accessing IRA funds before age 59½ without the 10% early withdrawal penalty.

Assumptions

Interest Rate (%)

IRS allows up to 120% of the federal mid-term AFR, or 5%, whichever is greater (Notice 2022-6).

Life Expectancy Table

Rev. Rul. 2002-62 lets you choose any of the three IRS tables; Single Life generally produces the highest payment.

72(t) SEPP Calculator: Penalty-Free Early IRA Withdrawals

This 72(t) calculator compares two of the three IRS-approved methods for taking Substantially Equal Periodic Payments (SEPP) from an IRA before age 59½ without triggering the 10% early withdrawal penalty.

Worked example (the defaults): a $500,000 IRA, age 50, using a 5% interest rate and the Single Life Table divisor of 36.2. The RMD method — recalculated every year based on that year's balance — produces $13,812 for the first year. The Fixed Amortization method — a level payment locked in for the whole period — produces $30,156 every year regardless of how the account performs. At age 50, the SEPP period must run at least 9.5 years (until age 59½), since the rule requires the longer of 5 years or reaching 59½.

The gap between these two numbers is the central trade-off: RMD gives you flexibility (it adjusts if your balance drops) but the lowest payment; Fixed Amortization gives you a much higher, predictable payment but locks you in regardless of what the market does. Rule 72(t) is one path to early retirement income — if you're planning the withdrawal side of retirement more broadly, the Safe Withdrawal Rate Calculator covers standard post-59½ drawdown planning.

How Each SEPP Method Is Calculated

Per Rev. Rul. 2002-62 and Notice 2022-6, the IRS permits three calculation methods. This calculator models two of them precisely:

RMD Method: Payment = Balance ÷ Life Expectancy Divisor (recalculated annually)

Fixed Amortization: Payment = Balance × [ i ÷ (1 − (1+i)⁻ⁿ) ]
where i = interest rate, n = life expectancy divisor (fixed at the start)

The third IRS method, Fixed Annuitization, uses a mortality-table annuity factor from a different table (Rev. Rul. 2002-62 Appendix B) rather than either life expectancy table above. It typically lands close to the Fixed Amortization result, but because it depends on a distinct actuarial factor, this calculator doesn't approximate it — showing the two methods that can be calculated precisely from published data is more accurate than guessing at the third.

The Modification Trap

72(t)/SEPP plans are unforgiving. Once started, payments must continue unmodified for the longer of 5 years or until you reach age 59½ — whichever ends later. Any change outside of one narrow exception "busts" the plan: the IRS retroactively applies the 10% penalty to every distribution you've already taken, plus interest, back to when you started. The one exception, added by SECURE 2.0, is a single one-time switch from Fixed Amortization or Fixed Annuitization to the RMD method, which lowers your payment going forward but doesn't bust the plan.

A common strategy to limit this risk: split your IRA before starting, moving only the amount you actually need into a separate account, then run 72(t) on that smaller account while leaving the rest untouched and flexible.