This 72t SEPP calculator sizes a penalty-free early payout from one account. Give it the balance, your birth month and year, the month of the first payment, a life expectancy table, and an interest rate. It returns the annual amount under all three methods in IRS Notice 2022-6, the highest rate you may use, the month the plan can finally change, and what a broken plan would cost.
The defaults describe someone born in June 1977 with $400,000 who takes the first payment in January 2027, at age 50, at a 5.54% rate. The level amortizing payment is $25,827.63 a year ($2,152.30 a month), and it must stay exactly that size through December 2036, when this person reaches 59 1/2.
72(t) SEPP Calculator
Figure substantially equal periodic payments from an IRA or former employer plan under the three IRS methods in Notice 2022-6, check the interest rate ceiling, and see how long the payment plan must run.
Estimates follow IRS Notice 2022-6, the 2022 life expectancy tables, and the Table 4 mortality rates in Treas. Reg. 1.401(a)(9)-9(e). The Joint and Last Survivor Table is not modeled. The payment dates, account valuation date, and custodian rules can change the right number. This is an educational tool, not tax advice; confirm the figures with your custodian or a tax professional before the first payment.
What Section 72(t) Allows, in Plain Terms
Money taken from a traditional IRA or 401(k) prior to age 59½ normally carries a 10% additional tax on the taxable part, on top of income tax. Section 72(t) of the Internal Revenue Code lists the exceptions. One covers “a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy)” of the owner, or the joint lives of the owner and a beneficiary. Planners call it SEPP.
Following that recipe to the letter means no early distribution penalty. The payments are still taxable income. From a former employer’s plan, you must have left that job before the first payment; IRAs have no such rule.
The Three Methods, Side by Side
Notice 2022-6 approves three ways to calculate the yearly figure. Other methods can qualify, but these three are automatically accepted:
- The required minimum distribution (RMD) method. Divide the prior December 31 balance by a life expectancy factor. It is refigured every year, so the check moves with the market.
- The fixed amortization method. Treat the balance like a loan paid off over your life expectancy at a chosen rate. The first-year amount repeats every year.
- The fixed annuitization method. Divide the balance by an annuity factor built from Treasury mortality rates and your rate. Also level.
| Defaults: $400,000, age 50, 5.54% | First year | Later years |
|---|---|---|
| Balance divided by Single Life 36.2 | $11,049.72 | Refigured |
| Balance divided by Uniform Lifetime 48.5 | $8,247.42 | Refigured |
| Level, amortized over 36.2 years | $25,827.63 | Same |
| Level, annuitized | $27,000.52 | Same |
The spread is the whole story. The recalculating route pays well under half of what the level methods pay, so people who need income for early retirement usually pick a level method, and people who want a small, flexible trickle pick the other. The calculator shows all three so you can match the payment amount to your real spending gap.
How Is Life Expectancy Determined?
Three expectancy tables are allowed for the first two methods: the Uniform Lifetime Table in Appendix A of Notice 2022-6 (it runs from age 10, unlike the retiree version, which starts at 72), the Single Life Table, and the Joint and Last Survivor Table. You read it at your age on your birthday in the distribution year. The single life expectancy at 50 is 36.2 years; the Uniform figure is 48.5. A bigger divisor means a smaller check.
The joint life expectancy option works with any actual designated beneficiary, not only a spouse, and gives the smallest payment. This tool supports Single Life and Uniform Lifetime. Whatever table you use in year one, you keep; switching tables later to get a bigger check is a modification.
The Allowable Interest Rate: 5% or 120% of the Mid-Term Rate
The level methods need a rate, and higher rates mean bigger payments. The maximum is the greater of 5% or 120% of the federal mid-term rate for either of the two months before the month of your first payment. Before 2022 there was no 5% floor, so level payments rose and fell with whatever the mid-term rate happened to be.
Treasury publishes the rate monthly in a revenue ruling. Rev. Rul. 2026-19 puts 120% of the mid-term rate at 5.54% (annual column) for October 2026, usable for a series starting in November or December 2026. A January 2027 start needs the November or December figure, so treat the default as a placeholder and enter the right month’s rate. At exactly 5%, the default level payment falls to $24,124.89.
Checking Our Math: Bob’s $400,000 IRA Account Balance
The official SEPP FAQ works one fact pattern three ways: Bob, age 50, $400,000 on December 31, a 4% rate, and the Single Life Table. A widely shared Reddit post in the FIRE community reported that the top 6 search results for this kind of tool failed those examples. Ours doesn’t.
| Bob’s method | Official figure | This tool |
|---|---|---|
| Recalculating, $400,000 / 36.2 | $11,050 | $11,049.72 |
| Level, amortizing factor 18.9559 | $21,102 | $21,101.63 |
| Level, annuitizing factor 18.1568 | $22,030 | $22,030.33 |
The annuity figure is the one most tools get wrong: it comes from the Table 4 mortality rates in Treas. Reg. 1.401(a)(9)-9(e), paid at the end of each year, not from a life expectancy number. Enter $400,000, age 50, and 4% to reproduce the rows.
How Long a Series of Substantially Equal Periodic Payments Must Run
The lock lasts until the later of two dates: five years after the first payment, or the day you reach age 59½. Start at 50 and 59 1/2 controls, which in the default case means 10 annual amounts. Start at 57 and the five-year clock controls.
The FAQ’s own dates: a taxpayer born August 15, 1968 who starts December 1, 2024 can’t change anything until December 1, 2029, even though 59 1/2 arrives February 15, 2028. The calculator returns the same month.
During the lock, leave the account alone: no contributions, no rollovers in or out, no extra payouts, no second series. You also can’t combine balances of multiple accounts into one figure. Each account needs its own series of payments, which is why people often split off a right-sized account first.
What Busting the Plan Costs
Taking more or less than the required amount, other than because of death or disability or under the qualified public safety employee rule, is a modification. The premature distribution penalty then comes back for every year of the series, plus interest for the deferral period, reported on line 4 of Form 5329.
In the default plan, the level amount over 10 years totals $258,276.34, so a slip in the final locked year puts $25,827.63 of 10% tax at stake before interest. It’s why a SEPP plan belongs in an account you won’t need to raid. Running out of money by following the method, though, is excused.
Switching Methods Once, and Only in One Direction
Notice 2022-6 permits a one-time change from either level method to the RMD method in any later year without recapture. After that you stay on the recalculating route. The official example: Sam began level payments of $36,251 at 52, then made the change to the RMD method at 55: $810,250 divided by 31.6 is $25,641. The reverse direction is a modification. If markets fall 30%, this switch shrinks the payment with the balance.
Early Withdrawals From Retirement Accounts: SEPP vs Other Routes
Before committing to rules for pre-tax retirement accounts this strict, compare other options for taking IRA distributions early:
- The age 55 rule. Leave an employer in or after the year you turn 55 and that plan’s payouts skip the 10% tax with no schedule (50 for public safety workers). It doesn’t cover IRAs; see how it works for federal workers in our TSP withdrawal calculator.
- Roth contributions. Your own contributions come out without a penalty at any age.
- Taxable savings. A brokerage account has no lock at all.
A 72(t) series fits best when most of your retirement savings sit in pre-tax accounts and you need steady income for years. It suits a Coast FIRE plan that stops work early. Check the total draw with our safe withdrawal rate tool and the life expectancy estimator.
Start by picking one account and valuing it on a single date. Run the 72t SEPP calculator at a few rates up to the ceiling, choose the smallest distribution amount that covers your gap, and have the custodian set up recurring payments before you start taking distributions.
Frequently Asked Questions
Is SEPP the same as 72(t)?
Yes. Section 72(t) is the code section; SEPP is the payment series it exempts.
Can you take 72(t) distributions monthly?
Yes, as long as each year’s installments add up to the annual amount. An early distribution calculator like this one gives the annual figure; divide it by 12.
Are the payments taxable?
Yes, as ordinary income. The exception removes only the extra 10%.
Can the IRA owner use a retirement account balance from a 401(k)?
Yes, from a former employer’s retirement plan, once you have separated from service.
Figures follow Notice 2022-6, the 2022 tables, and the October rate ruling; the ceiling changes monthly. This page is general education about the IRS rule, not tax advice for your situation.