SEPP / 72(t) Calculator 2026: Penalty-Free Early IRA Withdrawals

If you need to tap your IRA or 401(k) before age 59½ without the 10% early withdrawal penalty, a series of substantially equal periodic payments — a SEPP, or 72(t) plan — is one of the few IRS-approved options. Enter your account balance and age to compare the three calculation methods and see exactly how much you can withdraw each year.

Who this is for. Retirees who left the workforce before 59½ and need to bridge income from their IRA until Social Security, a pension, or other income starts. Not a fit if you can avoid it — the rules are rigid and a mistake triggers back taxes plus 10% penalty on all past distributions.

How a 72(t) SEPP works

IRC §72(t)(2)(A)(iv) carves out an exception to the 10% early withdrawal penalty for retirement distributions that are part of a "series of substantially equal periodic payments" (SEPP) made over the taxpayer's life expectancy.¹ You don't need to prove hardship, you don't need employer approval — you just follow the IRS rules exactly.

The three IRS-approved calculation methods

IRS Notice 2022-6 specifies three methods. They use the same Single Life Expectancy Table (IRS Pub. 590-B, Table I, updated 2022) but produce different annual payment amounts:²

Method	How it works	Payment fixed?	Typical level
RMD Method	Divide account balance by Single Life Table factor each year. Recalculated annually — amount changes with balance and age.	No (varies)	Lowest — typically 2.2–3.5% of balance
Fixed Amortization	Amortize the balance over the Single Life Table factor at a chosen interest rate (≤5%). Fixed annual payment for the life of the SEPP.	Yes (fixed)	Highest — rate-dependent
Fixed Annuitization	Divide balance by an annuity factor from IRS Appendix B of Notice 2022-6 at the same interest rate. Nearly identical to amortization in practice.	Yes (fixed)	≈ amortization (usually within 1–2%)

The calculator above computes the RMD and Fixed Amortization methods. Fixed Annuitization produces results nearly identical to Fixed Amortization at the same rate; the small difference depends on the actuarial table, which must be requested from your tax advisor or pulled from Notice 2022-6 Appendix B.

The maximum interest rate: 5% in 2026

For the Fixed Amortization and Fixed Annuitization methods, you may choose any rate up to the greater of 5% or 120% of the federal mid-term applicable federal rate (AFR) for either of the two months preceding your first SEPP payment.² Notice 2022-6 introduced the 5% floor in January 2022. As of May 2026, 120% of the mid-term AFR (annual compounding) is approximately 4.57% — below the 5% floor — so the maximum rate for new SEPPs starting now is 5.0%.

Why rate matters so much. On a $500,000 IRA for a 52-year-old, the difference between 3% and 5% adds roughly $5,000–$6,000 per year. Most advisors starting a SEPP in 2026 will use 5%.

How long must a SEPP continue?

Your series of substantially equal payments must run for the longer of five years or until you reach age 59½.¹ Examples:

Start at age 50: must continue until 59½ (9.5 years) — the 59½ rule dominates
Start at age 55: must continue until 60 (5 years) — the 5-year rule dominates because 59½ is only 4.5 years away
Start at age 57: must continue until 62 (5 years) — 5-year rule dominates again
Start at age 40: must continue until 59½ (19.5 years) — the 59½ rule dominates by a wide margin

Single Life Expectancy Table (2026) — key ages

These factors are used in both the RMD and Fixed Amortization methods under IRS Pub. 590-B, Table I, effective for 2022 and later per T.D. 9930:³

Age	Life expectancy factor	RMD-method payment on $500K	Amortization at 5% on $500K
45	41.0	$12,195	$28,911
48	38.1	$13,123	$29,615
50	36.2	$13,812	$30,156
52	34.3	$14,577	$30,773
55	31.6	$15,823	$31,807
57	29.8	$16,779	$32,622

Source: IRS Pub. 590-B, Appendix B, Table I (Single Life Expectancy), T.D. 9930, effective 2022+.³

How to "bust" a SEPP — and what it costs

A SEPP is one of the most unforgiving planning tools in the tax code. Any modification before the SEPP ends triggers immediate recapture: the IRS assesses the 10% penalty on all distributions received under the plan since inception, plus interest from each distribution date.¹

These actions constitute a modification:

Changing the annual amount — even slightly, unless switching to the RMD method (the one-time switch, below)
Skipping a payment or taking an extra payment from the SEPP account
Rolling money into the SEPP account — contributions or rollovers after the SEPP starts
Rolling money out of the SEPP account — including partial rollovers
Taking the plan distribution as a 60-day rollover instead of a direct distribution

The bust math on a large SEPP. Someone who took $35,000/year for 5 years ($175,000 total) and then modified the plan would owe 10% × $175,000 = $17,500 in penalties, plus interest from each distribution date — potentially $20,000–$22,000 total. This is why a SEPP account should be isolated and untouched.

The one-time switch to the RMD method

Notice 2022-6 allows a single switch: if you started with the Fixed Amortization or Fixed Annuitization method, you may switch once to the RMD method for all future years without it counting as a modification.² This is useful if your account balance falls sharply and the fixed payment feels unsustainably large relative to your portfolio. After the switch, the annual payment varies each year per the RMD method, typically producing a smaller distribution.

72(t) SEPP vs. Rule of 55 — which applies to you?

	72(t) SEPP	Rule of 55
Accounts eligible	IRA, 401(k), 403(b), most retirement accounts	Only your current employer's 401(k) or 403(b)
Minimum age	Any age under 59½	55 at separation from employer
Amount flexibility	Structured — must match computed SEPP amount exactly	Flexible — any amount, any frequency
Duration lock-in	5 years or to 59½ (whichever is later)	Ends at 59½ automatically
Rollover risk	Rolling the SEPP account to an IRA after the SEPP ends is fine; doing so during the SEPP busts it	Rolling the 401(k) to an IRA before 59½ eliminates penalty-free access
Best for	IRA owners under 55, or anyone needing structured IRA income before 59½	Age 55+ who separated from their most recent employer and have 401(k) there

Critical Rule of 55 trap: If you roll your employer plan to an IRA after separation and before 59½, you permanently lose Rule of 55 access on that money — only the 72(t) SEPP path remains.⁴ Decide before you roll over.

SEPP account isolation: the most important operational rule

The IRS treats a SEPP as tied to a specific account, not a specific person. You can have multiple IRAs and only set up a SEPP on one of them — the others remain untouched and available for non-SEPP purposes without affecting the plan. This is the key workaround for managing your SEPP amount:

Calculate how much annual income you need
Work backward: if Fixed Amortization at 5% pays ~6% of balance/year, how large a SEPP account do you need?
Segregate that amount into a dedicated IRA (transfer, not rollover) before starting the SEPP
Run the SEPP on that account only; leave your remaining IRAs alone

Example: You have $900,000 in IRAs and need $30,000/year for the next 8 years. Fixed Amortization at 5%, age 53 would require roughly $480,000 in the SEPP account to generate $30,000/year. Move $480,000 to a separate IRA, start the SEPP there, and leave $420,000 in your regular IRA to grow undisturbed.

Tax treatment: no penalty, but still ordinary income

A SEPP exempts you from the 10% early withdrawal penalty — it does not exempt the distribution from ordinary income tax. Every dollar you take from a traditional IRA or pre-tax 401(k) as part of a SEPP is taxable as ordinary income in the year received. There is no capital-gains treatment, no exclusion ratio (unless you have basis from non-deductible contributions).

Practical implications:

If your SEPP is your only income at age 52 and you're single, your first ~$16,100 of SEPP income is sheltered by the standard deduction — effectively tax-free
SEPP income counts toward provisional income for Social Security taxation (if you also receive SS — less common at this age, but possible if taking early benefits)
SEPP income counts toward IRMAA income for Medicare two years later (if you're 63+ and on Medicare)
A Roth IRA SEPP distributes tax-free contributions first; earnings become tax-free after age 59½ — but Roth SEPPs are uncommon since Roth contributions can be withdrawn anytime penalty-free anyway

When NOT to use a 72(t) SEPP

The SEPP's rigidity makes it the wrong tool in several situations:

You have a large taxable brokerage account — spend that first; preserve the IRA and avoid the SEPP lock-in
You're 55+ and just left an employer — Rule of 55 gives you flexible access to your 401(k) without a lock-in period
Your income need is temporary (1–2 years) — taking a 10% penalty on a small distribution may cost less than 5+ years of SEPP rigidity
You'll need the flexibility to vary withdrawals — a SEPP will bust if you under- or over-withdraw
You're within a year of 59½ — just take the penalty on one year's distribution; the math often favors the penalty over locking in a SEPP

Get a customized SEPP plan before you commit

A 72(t) SEPP is one of the most unforgiving planning decisions in retirement — a single mistake during the plan period triggers back penalties on everything. A retirement income specialist can: size your SEPP account correctly, choose the right method and rate, coordinate with your other accounts and income sources, and build in the documentation that protects you if the IRS asks questions.

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Related calculators and guides

401(k) Rollover at Retirement Guide — Rule of 55 trap, NUA strategy, and when NOT to roll to an IRA
RMD Calculator — once you reach 73 or 75, calculate your required minimum distribution
Roth Conversion Window Calculator — if your SEPP years have low income, these are prime Roth conversion years
Tax-Efficient Withdrawal Order Guide — which accounts to spend first to minimize lifetime taxes
Healthcare Costs Before Medicare — COBRA and ACA costs in your early retirement years
Monte Carlo Retirement Simulation — model whether your portfolio survives a long early retirement

IRC §72(t)(2)(A)(iv). Penalty exception for substantially equal periodic payments over life expectancy of taxpayer or joint life expectancy of taxpayer and beneficiary. Modification rule: IRC §72(t)(4) — penalty recapture if plan modified before the later of 5 years or age 59½. IRS SEPP FAQ (irs.gov).
IRS Notice 2022-6 (January 18, 2022). Supersedes Notice 2002-62 and Rev. Rul. 2002-62. Specifies three calculation methods; raises maximum interest rate to the greater of 5% or 120% of the federal mid-term AFR; requires use of updated life expectancy tables (T.D. 9930, effective 2022); permits one-time irrevocable switch from fixed methods to RMD method. IRS Notice 2022-6 (PDF).
IRS Publication 590-B (2025), Appendix B, Table I — Single Life Expectancy Table. Reflects updated mortality assumptions from T.D. 9930 (November 5, 2020), effective for distribution calendar years beginning on or after January 1, 2022. Sample values: age 50 = 36.2, age 55 = 31.6, age 59 = 28.0. IRS Pub. 590-B (irs.gov). Cross-referenced: Fidelity — IRS Single Life Expectancy Table.
IRC §72(t)(2)(A)(v) — Rule of 55 exception. Distributions from a qualified plan (not an IRA) to an employee who separated from service in or after the year the employee attained age 55. Confirmed: rolling the 401(k) to an IRA before 59½ eliminates this exception on the rolled funds. See also IRS Retirement Topics — Tax on Early Distributions.
IRS Rev. Rul. 2026-11 (May 2026 AFR). 120% of annual mid-term AFR for May 2026: approximately 4.57% — below the 5% floor set by Notice 2022-6. Maximum allowable rate for new SEPP amortization or annuitization plans commencing in May 2026: 5.0%. IRS Applicable Federal Rates (irs.gov).

Calculator uses IRS Single Life Expectancy Table (Pub. 590-B Appendix B, Table I, T.D. 9930, effective 2022). Maximum interest rate per IRS Notice 2022-6. Rule of 55 per IRC §72(t)(2)(A)(v). Penalty recapture rule per IRC §72(t)(4). Does not constitute financial or tax advice. Results are illustrative — your specific SEPP must be reviewed by a qualified tax professional before implementation. Values verified May 2026.