SEPP 72(t) Withdrawal Calculator: Penalty-Free Early IRA Payments
Estimate penalty-free early IRA withdrawals under IRS Rule 72(t) with the fixed amortization and RMD methods, using the IRS Single Life or Uniform Lifetime table, the 2026 maximum interest rate check and a year-by-year schedule to age 59½.
How it works
Amortization: payment = balance × r ÷ (1 − (1 + r)^−n) · RMD method: payment = balance ÷ n (n looked up again each year) · n = IRS life expectancy factor for your age · r ≤ greater of 5% or 120% of the federal mid-term rate
IRS Rule 72(t) lets you take substantially equal periodic payments (SEPP) from an IRA, or a former employer’s plan, before age 59½ without the 10% additional tax on early distributions. Notice 2022-6 allows three methods. The fixed amortization method spreads the balance over your life expectancy at a chosen interest rate, like a loan paid back to you, and gives the same payment every year. The RMD method divides the balance by the life expectancy factor each year, so the payment is smaller and moves with the account. The fixed annuitization method uses an IRS mortality table and usually lands close to amortization. The life expectancy factor comes from one of three IRS tables: the Single Life Table gives the shortest life expectancy and so the largest payment, the Uniform Lifetime Table gives the smallest, and the Joint and Last Survivor Table depends on a beneficiary’s age (enter its factor yourself). The interest rate may be any rate up to the greater of 5% or 120% of the federal mid-term rate for either of the two months before the first payment; the October 2026 figure is 5.54%. Once started, the payments must continue unchanged for the longer of five years or until you reach 59½. Modifying them early brings back the 10% penalty on every payment already taken, plus interest. The schedule projects the balance with a return you choose, which does not change the fixed payment.
Worked example
Default: a $500,000 IRA, age 52, the Single Life Table and a 5% rate. The factor for age 52 is 34.3 years, so the amortization payment is 500,000 × 0.05 ÷ (1 − 1.05^−34.3) = $30,772.60 a year, or $2,564.38 a month. The RMD method gives 500,000 ÷ 34.3 = $14,577.26 in year 1. The rate is within the 5.54% maximum (October 2026), and payments must continue for 7.5 years, until age 59½. Using the Uniform Lifetime Table instead (factor 46.5) lowers the amortization payment to $27,884.43, and the RMD method to $10,752.69.
Sources: IRS: Substantially equal periodic payments · IRS Notice 2022-6 (IRB 2022-05) · IRS Rev. Rul. 2026-19: applicable federal rates, October 2026 · Fidelity: IRS Single Life Expectancy Table · Fidelity: 72(t) rule explained (worked example)
Frequently asked questions
What is a 72(t) SEPP?
It is a series of substantially equal periodic payments from an IRA or retirement plan that qualifies for an exception to the 10% early-withdrawal penalty. You must use an IRS-approved method and keep the payments going for at least five years or until age 59½, whichever is longer.
Which method gives the biggest payment?
The fixed amortization method with the Single Life Table and the highest allowed interest rate usually gives the largest payment. The RMD method gives the smallest and changes every year. If you need less income, the Uniform Lifetime Table or a lower rate shrinks the fixed payment.
What interest rate can I use for 72(t) in 2026?
Any rate up to the greater of 5% or 120% of the federal mid-term rate for either of the two months before your first payment. The IRS published 5.54% for October 2026, so the cap is 5.54% for a schedule that can use that month. Check the latest revenue ruling before you start.
What happens if I break the schedule?
Modifying or stopping the payments before the required period ends applies the 10% penalty retroactively to all prior SEPP withdrawals, plus interest. Death, disability and a one-time switch from a fixed method to the RMD method do not count as a modification.
Can I use only part of my IRA for 72(t)?
Yes. The calculation applies to one account, so many people split an IRA first and run the SEPP from an account sized to the income they need, keeping the rest flexible. You cannot add to or take extra from the SEPP account during the schedule.
Related calculators
Educational estimate, not tax, legal or financial advice. A 72(t) mistake can trigger penalties on years of withdrawals; confirm the method, table, rate and balance with a tax professional or your IRA custodian before starting.