RETIREMENT · EARLY ACCESS

72(t) SEPP Calculator

Calculate early retirement distributions using all three IRS-approved 72(t) SEPP methods: Required Minimum Distribution, Amortization, and Annuitization. Compare annual payouts side by side.

LAST REVIEWED · APR 08, 2026 · BY A. CHEN, CFP®
You need
$28,918 /yr
72(t) SEPP DetailsReset
Account balance
$500,000
$50K$5M
Your ageMust be under 59 1/2
50 yrs
3559
Interest rateUp to 120% of mid-term AFR
4.5%
1%8%
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How 72(t) SEPP works

Section 72(t) lets you access retirement funds before 59½ without the 10% early withdrawal penalty, as long as you take substantially equal periodic payments (SEPP) for at least 5 years or until 59½, whichever is longer.

The three methods

  • RMD Method — Smallest payment. Recalculated annually based on current balance and life expectancy. Payments fluctuate.
  • Amortization — Fixed payment. Balance amortized over life expectancy at a reasonable interest rate. Most common choice.
  • Annuitization — Typically the largest payment. Uses annuity factor with mortality adjustment.

Important rules

Once started, SEPP payments cannot be modified (except a one-time switch from amortization/annuitization to RMD). Modifying the schedule triggers retroactive 10% penalties on all distributions taken. The commitment is serious.

Methodology. Three IRS-approved methods per Revenue Ruling 2002-62: (1) RMD = balance ÷ single life expectancy factor; (2) Amortization = balance amortized over life expectancy at the chosen interest rate; (3) Annuitization = balance ÷ annuity factor derived from mortality tables and interest rate. Life expectancy from IRS Single Life Expectancy Table.

Sources

  • IRS Revenue Ruling 2002-62 — SEPP methods
  • IRC Section 72(t)(2)(A)(iv) — substantially equal periodic payments exception
  • IRS Single Life Expectancy Table
  • IRS Notice 2022-6 — updated interest rate guidance for SEPP calculations
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Frequently asked questions

What interest rate should I use? +
The IRS allows up to 120% of the federal mid-term rate. As of 2024, reasonable rates are typically 4–5%. Higher rates produce larger payments.
Can I stop SEPP payments early? +
No. You must continue for 5 years or until age 59½, whichever is later. Stopping early triggers retroactive penalties on all prior distributions.
Can I set up SEPP on part of my IRA? +
Yes. You can split your IRA into two accounts, set up SEPP on one, and leave the other untouched. This gives you more control over the payment amount.
Which method should I choose? +
Most people choose amortization for a fixed, predictable payment. RMD is best if you want flexibility (payments adjust annually). Annuitization provides the highest initial payment.
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