72(t) SEPP Calculator
Calculate 72(t) substantially equal periodic payments to tap a retirement account before 59.5 without the penalty.
Want to understand the concept, not just the number? Read The Social Security and Early Withdrawals Guide .
How it's calculated
Pulling money from a retirement account before age 59.5 usually costs a 10 percent early-withdrawal penalty. Rule 72(t) is the main exception. It lets you take substantially equal periodic payments, or SEPP, penalty-free, as long as you keep them going for five years or until 59.5, whichever is longer. It is a tool for early retirees who need income before the normal age.
There are three IRS-approved methods, and they produce different amounts. The amortization method is the most common and usually the largest. It spreads your balance over your life expectancy at a chosen interest rate, capped at 120 percent of the federal mid-term rate, as a level annual payment. Take the default. A 500,000 dollar balance, a 5 percent rate, and a 36.2-year life expectancy gives about 30,156 dollars a year, or 2,513 a month. The simpler RMD method divides the balance by life expectancy, giving a smaller 13,812 dollars that also changes each year.
The rules are strict and unforgiving. Once you start, you cannot change the amount or stop early, and a single mistake retroactively applies the 10 percent penalty plus interest to every payment you took. Because of that, many people set up a separate IRA sized to produce exactly the payment they need, leaving the rest untouched. Use this to size the payment, then work with a tax professional before starting, since the stakes for an error are high.
Assumptions
- The amortization method spreads the balance over your life expectancy at the interest rate as a level payment. The RMD method divides the balance by life expectancy.
- Payments must continue, unchanged, for five years or until age 59.5, whichever is longer. Breaking the schedule triggers penalties and interest back to the start.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
What is a 72(t) SEPP?
It is a series of substantially equal periodic payments from a retirement account that let you withdraw before age 59.5 without the 10 percent early-withdrawal penalty. You must continue them for five years or until 59.5, whichever is longer.
Which 72(t) method should I use?
The amortization method usually gives the largest, and it is the most common. The RMD method gives a smaller amount that recalculates each year. The right one depends on how much income you need. This calculator shows two of the three methods.
What happens if I break the 72(t) schedule?
It is costly. Changing the amount or stopping early, before the five years or age 59.5, retroactively applies the 10 percent penalty plus interest to all the payments you already took. That is why the schedule must be followed exactly once it starts.
Can I set up 72(t) on part of my savings?
Yes, and many people do. You can split your IRA and run 72(t) on a separate account sized to produce just the payment you need, leaving the rest untouched and flexible. This limits the money locked into the rigid schedule.