72t Calculator
Work out penalty-free early IRA withdrawals under rule 72(t): the payment, the rate allowed and how long it must last.
72t calculator (SEPP)
How rule 72(t) works
Withdrawals from an IRA before age 59½ normally cost a 10% additional tax on top of income tax. Section 72(t) waives it for a series of substantially equal periodic payments (SEPP) based on your life expectancy. The IRS accepts three methods (Notice 2022-6):
- Fixed amortization: the balance amortized over your life expectancy at a chosen rate; the same amount every year. Usually the largest payment.
- Fixed annuitization: the balance divided by an annuity factor from the IRS mortality table; similar to amortization.
- RMD method: the balance each year divided by life expectancy; it changes yearly and is usually the smallest.
The interest rate can be up to the greater of 5% or 120% of the federal mid-term rate for either of the two months before your first payment, so 5% is always available. Life expectancy comes from the Single Life, Uniform Lifetime or Joint and Last Survivor table.
| Age | Single life expectancy | Amortization at 5% ($500,000) | RMD method ($500,000) |
|---|---|---|---|
| 45 | 41.0 | $28,911 | $12,195 |
| 50 | 36.2 | $30,156 | $13,812 |
| 52 | 34.3 | $30,773 | $14,577 |
| 55 | 31.6 | $31,807 | $15,823 |
| 57 | 29.8 | $32,622 | $16,779 |
The catch: no changes until the later of 5 years or 59½
Payments must continue for at least 5 full years or until age 59½, whichever is later. Taking a different amount, adding money or rolling the account over is a modification: the 10% tax then applies retroactively to every SEPP payment, plus interest. You can switch once from a fixed method to the RMD method without penalty. Use a separate IRA holding only the amount you need, so the payment fits your budget.
Worked example
A 50-year-old with $500,000 uses a 36.2-year life expectancy and 5%: fixed amortization gives $30,156 a year, versus $13,812 under the RMD method. Payments must run to 59½. Income tax still applies; the 2026 IRA rules are on the traditional IRA page, and for after 59½ see the RMD chart.
Common questions
What interest rate can I use for 72t?
Up to the greater of 5% or 120% of the federal mid-term rate for either of the two prior months.
How long do 72t payments last?
At least 5 full years or until age 59½, whichever is later.
What happens if I change my 72t payment?
The 10% additional tax applies retroactively to past SEPP payments, plus interest.
Can I switch 72t methods?
Once, from a fixed method to the RMD method.
Sources
- IRS: Substantially equal periodic payments FAQ
- IRS Notice 2022-6 (via Internal Revenue Bulletin 2022-5)
- eCFR 26 CFR 1.401(a)(9)-9: life expectancy tables
More retirement calculators: 401(k) Calculator with Employer Match · 401k or Roth IRA · Annuity Calculator · Backdoor Roth IRA Calculator
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General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.