72(t) SEPP Calculator
Substantially Equal Periodic Payments let you access your IRA before age 59.5 without the 10% early withdrawal penalty. Three IRS-approved methods produce very different amounts. This calculator shows all three and explains the commitment you are making before you start.
How this calculator works and the math behind itWhen a SEPP makes sense -- and when it does not
SEPP is most appropriate for people who retire early and have substantial IRA savings but need income before 59.5. The FIRE community uses it frequently. It is also common for people who left a corporate job in their early-to-mid 50s with a large 401(k) they rolled to an IRA.
The key question is whether you can tolerate the inflexibility. SEPP locks you into a fixed distribution schedule for potentially 7-9 years if you start at 50-52. You cannot stop, reduce, or skip payments without triggering the retroactive penalty. If your financial situation changes -- a health crisis, an inheritance, a business opportunity -- you cannot reduce distributions without paying the penalty on everything you have already taken.
An alternative worth considering: if you have a 401(k) (not an IRA) from a job you left at age 55 or older, the Rule of 55 lets you take withdrawals from that specific 401(k) without any penalty or SEPP commitment. Check whether this applies before starting a 72(t) plan.
Frequently asked questions
What is a 72(t) SEPP?
A series of Substantially Equal Periodic Payments that lets you access IRA money before 59.5 without the 10% penalty. You commit to the same payment schedule for the longer of 5 years or until age 59.5. Three calculation methods are available.
What are the three calculation methods?
RMD method produces the lowest, variable distributions. Fixed Amortization produces higher, fixed distributions amortized at the applicable federal rate. Fixed Annuitization produces similar amounts to amortization. You choose one method and stick with it (you can switch to RMD method once, per Notice 2022-6).
What happens if I break the plan early?
10% penalty applies retroactively to all distributions already taken in the plan, plus IRS interest. This is severe. Do not start a SEPP unless you are confident you can sustain the payments for the full required period.
Can I use part of my IRA?
Yes. Split your IRA into a SEPP account and a non-SEPP account. Base the calculation on the SEPP account balance only. The non-SEPP account remains untouched and available after 59.5 without penalty.
Is Rule of 55 better than SEPP?
Often yes, if you qualify. Rule of 55 allows penalty-free withdrawals from a 401(k) plan if you left that employer in or after the calendar year you turned 55. No fixed schedule, no commitment, no retroactive penalty risk. Check whether your 401(k) can stay with the plan or must be rolled to an IRA first -- rolling it eliminates the Rule of 55 option.