72(t) SEPP Calculator
The account, your age, and the rate you will use
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Long-range scenario, not a guarantee. Small changes in returns, inflation, fees, taxes, and withdrawal timing can materially change the result.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the balance of the account the series will actually run on — not your whole portfolio. Most people split an IRA in two first and commit only one of the halves.
- 02
Enter your age at the first payment. It steps by half a year because the duration rule turns on 59½, and a 57½-year-old gets a different answer from a 57-year-old.
- 03
Check the interest rate. It opens at 5%, which Notice 2022-6 permits in every month; the stat beside it shows the ceiling, which is the greater of 5% and 120% of the federal mid-term rate for either of the two months before you start.
- 04
Read the three methods together. Fixed annuitization and fixed amortization lock a payment for the life of the series; the RMD method recalculates every year and pays roughly half as much in year one.
- 05
Check the year the series is finally free, and what breaking it early would cost. If you are already partway through, enter the years of payments taken to price a break today.
Formula
RMD method: payment = balance ÷ the life expectancy factor, recomputed every year. Fixed amortization: payment = balance × i ÷ (1 − (1 + i)⁻ⁿ), where i is the chosen rate and n the life expectancy factor, fixed in year one. Fixed annuitization: payment = balance ÷ an annuity factor built from the §1.401(a)(9)-9(e) mortality rates at that rate, also fixed. Rate ceiling = the greater of 5% and 120% of the federal mid-term rate for either of the two months before the first distribution. Series ends at the later of five years and 59½.
Example
$500,000 committed at age 55, at 5%, on a Single Life Table factor of 31.6. The RMD method pays $500,000 ÷ 31.6 = $15,823 in year one and recalculates each year afterwards. Fixed amortization levels the balance over 31.6 years at 5% and pays $31,807 every year. Fixed annuitization divides by an annuity factor of 15.2 and pays $32,895 — the largest, $2,741 a month. The rate ceiling is 5.23%, so 5% leaves room. Five years from the first payment is age 60, which is later than 59½, so the five-year clock binds and the payment cannot move until then. Stopping after four years would cost about $14,059: $12,723 of retroactive penalty plus $1,336 of interest, all in one tax year.
Definitions
- Substantially equal periodic payments
- The series itself. Calculated once under one of three approved methods and taken at least annually until the later of five years and age 59½.
- Life expectancy factor
- The divisor. From the Single Life, Uniform Lifetime or Joint and Last Survivor Table — a larger factor produces a smaller payment.
- Modification
- Any change to the series, including a contribution, a rollover or a payment of the wrong amount. It triggers retroactive penalty on every payment already taken.
- Recapture
- The retroactive 10%, plus interest at the IRS underpayment rate, assessed in the year the series is broken.
Good to know
A door that locks behind you
Almost every exception to the 10% early-distribution penalty is an event you did not choose — death, disability, a levy, a disaster, a medical bill past the AGI floor. Substantially equal periodic payments are the only one you elect, and they are the only one available to somebody whose sole problem is that they retired early and the money is in an IRA. The governing guidance is Notice 2022-6, which modifies and supersedes the older Rev. Rul. 2002-62 for any series beginning on or after 1 January 2023 and remains unsuperseded. What it gives you is access; what it takes is flexibility. Once the first payment is made, the amount is fixed by the method you chose and cannot move — not up in a year you need more, not down in a year the market falls — until the later of five years and age 59½. That asymmetry is the whole design. It is why a SEPP is a serious commitment rather than a withdrawal strategy, and why the first question is almost never which method, but whether you need one at all.
Three methods, and the choice is made once
Notice 2022-6 approves exactly three calculations, and the spread between them is far wider than most people expect. On $500,000 at age 55 at 5%, the required minimum distribution method pays $15,823, fixed amortization pays $31,807 and fixed annuitization pays $32,895 — more than two to one from top to bottom, on identical inputs, all three equally acceptable. The RMD method divides the balance by a life expectancy factor and does it again every year, so the payment floats with the account: it falls in a bad market, which is protective, and it is the only method whose annual redetermination is expressly not a modification. The two fixed methods calculate once, in the first distribution year, and pay that figure for the life of the series whatever happens next. Behind the divisor sits a second choice most calculators hide: three life expectancy tables are permitted — Single Life, Uniform Lifetime, and Joint and Last Survivor, the last usable even where the beneficiary is not your spouse. Single Life gives the smallest factor and therefore the largest payment, which is why it is the usual pick.
The rate is a ceiling, not a rate
Section 3.02(c) of Notice 2022-6 allows any interest rate up to the greater of 5% and 120% of the federal mid-term rate for either of the two months immediately preceding the month the distributions begin. Three things in that sentence do the damage. It is a maximum, not a mandate — a lower rate is perfectly legal and simply pays less, which is often what you want if the ceiling would produce more than you need. The eligible months are the two BEFORE the start month, not the start month itself, so a series beginning in October looks at August and September; for a September 2026 start the ceiling is 5.23%, from the July and August rulings, even though September's own ruling gives 5.40%. And the 5% is not a floor on rates generally, it is a floor on the ceiling: 5% is available in every month of every year, however low the AFR falls. That is why this page opens at 5% rather than at this month's figure. A hardcoded AFR is stale within weeks; 5% never is.
Busting it, and the four ways out that are not busting it
IRC 72(t)(4) is unusually harsh. Break the series and the 10% you avoided is charged retroactively on every payment you have ever taken under it, plus interest for the deferral period, all assessed in the tax year of the break on Form 5329 — four years into a $31,807 payment, roughly $14,059 landing at once. Taking a dollar more than the schedule, a dollar less, or rolling the account over all count as breaking it, and so does anything that changes the balance: no contribution in, no partial transfer out, no rollover of a payment you receive. Four things do not count. Death and disability. Exhausting the account by following the method correctly, which the notice expressly protects. A one-time switch from either fixed method to the RMD method in any later year, which is the standard rescue when a market fall makes a fixed payment unsustainable — though once switched, any further change is a modification. And a trustee-to-trustee transfer where the payments in combination still satisfy the schedule. The practical consequence of all this is that the sizing happens before the first payment: split the IRA in two, run the series on the half that produces the payment you need, and leave the other half outside the series entirely.
Frequently asked questions
What is a 72(t) SEPP?
A series of substantially equal periodic payments taken from a retirement account under IRC 72(t)(2)(A)(iv). It is the one exception that lets somebody with no other qualifying event draw an IRA before 59½ without the 10% penalty. The price is rigidity: once started, the payment cannot change until the later of five years and age 59½.
Which of the three methods should I use?
Whichever produces the payment closest to what you actually need. On $500,000 at age 55 at 5%, fixed annuitization pays $32,895 a year, fixed amortization $31,807 and the RMD method $15,823 — all three equally legal, a spread of $17,072 on identical inputs. The two fixed methods freeze the payment; the RMD method refloats it every year with the balance, so it falls in a bad market.
What interest rate am I allowed to use?
Any rate up to a ceiling: the greater of 5% and 120% of the federal mid-term rate for either of the two months immediately preceding the month your distributions begin. The two eligible months are the ones BEFORE the start month, not the start month itself. For a series beginning in September 2026 that ceiling is 5.23%, from the July and August rulings. It is a maximum, not a requirement — a lower rate is always permitted and simply pays less.
How long am I locked in?
Until the later of five years from the first payment and age 59½. At 55 the five-year clock binds and the series ends at 60. At 45 it is age 59½ that binds, and the commitment is fourteen and a half years — which is why a series started young is usually the wrong tool.
What happens if I break it?
The full 10% is charged retroactively on every payment you have ever taken under the series, plus interest for the deferral period, all assessed in the tax year of the break on Form 5329. Four years into a $31,807 payment that is about $14,059. Taking a dollar more than the schedule, a dollar less, or rolling the account over all count as breaking it.
Is there any way out that is not a modification?
Four. Death and disability. Exhausting the account by following the method correctly — the balance is allowed to run to zero. A one-time switch from either fixed method to the RMD method in any later year, which is the standard rescue when a market fall makes a fixed payment unsustainable. And a trustee-to-trustee transfer where the payments in combination still satisfy the schedule.
Do I pay tax on the payments?
Yes. Penalty-free is not tax-free — every dollar from a traditional IRA is ordinary income in the year received. The exception removes the 10% and nothing else, which is why a series is usually sized to fill a low bracket rather than to fund the whole of early retirement.