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72(t) / SEPP Calculator

The IRS lets you tap an IRA before 59½ without the 10% early-withdrawal penalty — if you take “substantially equal periodic payments” on a strict schedule. This calculator runs all three IRS-approved methods on your balance, shows your annual payment and how long the schedule locks you in, and compares the methods side by side.

What would your 72(t) payments be?

Your IRA balance, your age, and the IRS method — turned into an annual payment, a lock-in schedule, and a side-by-side method comparison.

IRA balance $

The balance of the IRA the schedule is calculated on. Smart move: carve a separate IRA off just for this plan and leave the rest untouched.

Your current age

Your age at the birthday in the calendar year payments begin. The schedule must run the longer of 5 years or until you reach 59½.

IRS calculation method

The two fixed methods lock your payment for the whole schedule; the RMD method re-prices annually and starts smaller.

Interest rate % (fixed methods)

IRS Notice 2022-6 caps this at the greater of 5% or 120% of the federal mid-term rate — 5% binds in today’s rate environment.

Try:

Fixed amortization$24,618/yrLocked for 7½ years · ends April 2034

Year-one annual payment by IRS method

Fixed amortizationLocked for the full schedule

$24,618

Fixed annuitizationLocked for the full schedule

$24,618

RMD methodRecalculated every year

$11,662

The fixed methods lock your payment for the whole schedule; the RMD method floats with your balance — smaller when the market falls, larger when it rises. One narrow escape hatch: the IRS lets you switch from a fixed method to the RMD method once, never the reverse.

Your 72(t) schedule

IRA balance used$400,000

IRS life expectancy34.3 years at age 52

MethodFixed amortization

Annual payment$24,618/yr

Monthly equivalent$2,052/mo

Schedule length7½ years — the longer of 5 years or age 59½

Schedule endsApril 2034 (age 59½)

Annual payments in schedule8 annual payments

Approx. total withdrawn≈ $196,945 over the full schedule

Income taxOrdinary income tax — only the 10% penalty is waived

The fixed method pays $24,618 a year — about $2,052 a month — and it cannot change for 7½ years. The schedule runs to around April 2034 (age 59½), 8 annual payments totaling roughly $196,945. Run it from a separate IRA carved off just for this plan: once the schedule starts, that account can receive no contributions, no rollovers, and no extra withdrawals — only the SEPP checks and market movement. And remember: the penalty is waived, the income tax is not.

How it works: fixed amortization: annual payment = balance × r ÷ (1 − (1 + r)⁻ⁿ), where n is your IRS Single Life Table life expectancy (34.3 at age 52) and r is the chosen rate (capped at 5% by IRS Notice 2022-6). Fixed annuitization divides the balance by the present-value annuity factor — under current IRS guidance it lands on the same number. RMD method: year-one payment = balance ÷ life expectancy ($400,000 ÷ 34.3 ≈ $11,662), recalculated every year. The schedule must run the longer of 5 years or until age 59½; changing it early triggers the 10% penalty retroactively on every pre-59½ distribution, plus interest. Estimates only — not tax advice; confirm the schedule with a tax professional before the first distribution.

How 72(t) / SEPP payments work

Normally, pulling money out of a traditional IRA before 59½ costs you ordinary income tax plus a 10% early-withdrawal penalty. Section 72(t) of the tax code offers one of the few exits: take a series of substantially equal periodic payments (SEPP) from the IRA, keep them going for the longer of 5 years or until you reach 59½, and the 10% penalty disappears. The catch is the rigidity — miss a payment, change the amount, stop early, or add money to the account, and the IRS can treat it as a “modification” and apply the 10% penalty retroactively to every distribution you already took, plus interest. The comparison bars above exist because your first real decision — which method — sets the size of every check.

The formula

Fixed amortization: payment = balance × r ÷ (1 − (1 + r)⁻ⁿ) · Fixed annuitization: payment = balance ÷ annuity factor · RMD method: year-one payment = balance ÷ n — where n is your IRS Single Life Table life expectancy and r is the chosen rate (capped at 5% by IRS Notice 2022-6).

Worked example: $400,000 at age 52, fixed amortization at 5%

The IRS Single Life Table gives a 52-year-old a life expectancy of n = 34.3 years. The annuity factor is (1 − 1.05^−34.3) ÷ 0.05 = 16.25, so the annual payment is $400,000 ÷ 16.25 = $24,618 a year (about $2,052 a month). The schedule must run the longer of 5 years or to 59½ — that is 7½ years — for 8 annual payments totaling roughly $196,945. The RMD method on the same numbers pays only $11,662 in year one ($400,000 ÷ 34.3) but re-prices every year from the actual balance.

Now try “RMD method at 50” in the scenarios above: the checks start less than half the size, but if the market drops, the payment drops with it instead of draining a shrinking account — which is exactly why people pick it.

Where this comes in handy

Early retirement bridge: retired at 50–57 with most of your wealth in pre-tax accounts and nothing to live on until 59½.
Severance or buyout: rolled a 401(k) into an IRA after leaving a job and need income now, not in five years.
Rule of 55 does not apply: you left your employer before the calendar year you turned 55, so the 401(k) exception is off the table.
Comparing against a Roth ladder: the fixed method’s locked payment is the number a conversion ladder has to beat on flexibility, not just dollars.
Sizing a separate IRA: carve off exactly the balance that produces the payment you need, and leave the rest of your retirement money fully flexible.

For the full walkthrough — the three methods, the modification rules, the one-time switch, the separate-IRA strategy, and how SEPP compares to the Rule of 55 and Roth ladders — see the guide How 72(t) SEPP payments work.

72(t) / SEPP — frequently asked questions

How long do 72(t) payments have to last?

The longer of 5 years or until you reach age 59½. Start at 57 and the 5-year leg binds (your schedule runs past 59½, to about 62); start at 52 and the 59½ leg binds (about 7½ years). The only early exits are death or disability. With annual payments, the schedule is not over after your fifth check — it ends on the fifth anniversary of the first distribution.

What happens if I change or stop the payments early?

The IRS treats it as a “modification,” and the 10% early-withdrawal penalty comes back retroactively on every distribution you took before 59½, plus interest as if the penalty had been assessed each year. Even missing a single year counts — one well-known cautionary tale is a saver who ran the schedule correctly for a decade, forgot one annual distribution at 55, and owed the penalty on ten years of payments. There is no hardship waiver for this.

Can I switch methods once the schedule starts?

There is exactly one allowed change: a one-time switch from a fixed method (amortization or annuitization) to the RMD method. You cannot switch from the RMD method to a fixed method, and you cannot switch between the two fixed methods. People use the one-time switch as an emergency valve — if the account balance falls so far that the locked payment is draining it, moving to the recalculated RMD method shrinks the checks and slows the bleed.

Why does everyone say to use a separate IRA for 72(t)?

Because once the schedule starts, that account is frozen in every direction: no contributions, no rollovers in, no transfers in — and no withdrawals beyond the scheduled payments. Any of those is a modification. Carving off a dedicated IRA sized to the payment you need keeps the handcuffs on one account while the rest of your retirement money stays fully flexible for emergencies, Roth conversions, or a change of plans.

Do I still owe income tax on 72(t) payments?

Yes. SEPP waives only the 10% early-withdrawal penalty — distributions from a traditional IRA are still taxed as ordinary income in the year you receive them. Unlike 401(k) payouts, IRA distributions have no mandatory 20% federal withholding, so set aside for the tax bill yourself (or elect voluntary withholding) rather than discovering it in April.

Can I use 72(t) on a 401(k) or a Roth IRA?

72(t) schedules are an IRA tool. A 401(k) has its own early-access exception — the Rule of 55: leave your employer in or after the calendar year you turn 55 and you can draw from that employer’s plan penalty-free (rolling it into an IRA first destroys the exception). A Roth IRA rarely needs SEPP at all: your contributions come out tax- and penalty-free at any age, and seasoned conversions follow after five years.