{
  "slug": "sepp-72t-withdrawal",
  "title": "72(t) SEPP Withdrawal Calculator",
  "heading": "72(t) SEPP Early Withdrawal Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/sepp-72t-withdrawal",
  "summary": "Estimate substantially equal periodic payments to tap retirement funds penalty-free before 59½.",
  "description": "Rule 72(t) lets you pull money from an IRA or old 401(k) before age 59½ without the usual 10% early withdrawal penalty, provided you commit to Substantially Equal Periodic Payments (SEPP) for five years or until you hit 59½, whichever is longer. This tool estimates the annual payment under the three IRS-approved methods: Required Minimum Distribution (RMD, which recalculates and varies each year), Fixed Amortization (level payment, like amortizing the balance over your life expectancy), and Fixed Annuitization (level payment using an annuity factor). The amortization and annuitization methods generally produce larger, level payments; the RMD method produces the smallest initial payment but adjusts with the balance every year. Once you start, breaking the schedule early — taking more or less, or stopping — triggers retroactive 10% penalties on all prior distributions plus interest, so this decision needs real commitment.",
  "formula": "RMD method: payment = balance ÷ life expectancy factor (recalculated yearly). Fixed amortization: payment = balance amortized over life expectancy at the chosen interest rate, like a loan payment. Fixed annuitization: payment = balance ÷ annuity factor at the chosen rate.",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=sepp-72t-withdrawal",
  "inputs": [
    {
      "id": "balance",
      "label": "Account balance",
      "kind": "number",
      "hint": null,
      "default": 500000,
      "unit": "$",
      "min": 1000,
      "max": null
    },
    {
      "id": "age",
      "label": "Your current age",
      "kind": "number",
      "hint": null,
      "default": 48,
      "unit": null,
      "min": 30,
      "max": 59
    },
    {
      "id": "lifeExpectancy",
      "label": "IRS life expectancy factor (single life, Uniform table)",
      "kind": "number",
      "hint": null,
      "default": 36,
      "unit": null,
      "min": 10,
      "max": 55
    },
    {
      "id": "rate",
      "label": "Interest rate assumption (max 120% federal midterm rate)",
      "kind": "number",
      "hint": null,
      "default": 5,
      "unit": "%",
      "min": 0,
      "max": 10
    },
    {
      "id": "method",
      "label": "SEPP method",
      "kind": "select",
      "hint": null,
      "default": "amortization",
      "options": [
        {
          "value": "rmd",
          "label": "RMD method (smallest, variable)"
        },
        {
          "value": "amortization",
          "label": "Fixed amortization (level)"
        },
        {
          "value": "annuitization",
          "label": "Fixed annuitization (level)"
        }
      ]
    }
  ],
  "outputs": [
    {
      "id": "annual",
      "label": "Estimated annual SEPP payment",
      "format": "currency",
      "hint": null,
      "primary": true
    },
    {
      "id": "monthly",
      "label": "Equivalent monthly amount",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "yearsToRun",
      "label": "Required years of payments",
      "format": "decimal",
      "hint": null,
      "primary": false
    },
    {
      "id": "totalOverTerm",
      "label": "Total withdrawn over required term",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Account balance: 500000 $",
      "Your current age: 48",
      "IRS life expectancy factor (single life, Uniform table): 36",
      "Interest rate assumption (max 120% federal midterm rate): 5 %",
      "SEPP method: Fixed amortization (level)"
    ],
    "outputs": [
      "Estimated annual SEPP payment: $30,217",
      "Equivalent monthly amount: $2,518",
      "Required years of payments: 11.5",
      "Total withdrawn over required term: $347,498"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter account balance ($).",
      "Enter your current age.",
      "Enter irs life expectancy factor (single life, uniform table).",
      "Enter interest rate assumption (max 120% federal midterm rate) (%).",
      "Enter sepp method.",
      "Read your estimated annual sepp payment on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "balance": 300000,
        "age": 48,
        "lifeExpectancy": 21.599999999999998,
        "rate": 5,
        "method": "amortization"
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "balance": 500000,
        "age": 48,
        "lifeExpectancy": 36,
        "rate": 5,
        "method": "amortization"
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "balance": 800000,
        "age": 48,
        "lifeExpectancy": 55,
        "rate": 5,
        "method": "amortization"
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "How long must I keep taking 72(t) payments?",
      "a": "The greater of five years or until you reach age 59½. If you start at 48, you're locked in for roughly 11.5 years, not just five, because you must also cross 59½. Starting closer to 55 shortens the commitment to the five-year minimum."
    },
    {
      "q": "Can I change the payment amount later?",
      "a": "You can switch once, from either the amortization or annuitization method to the RMD method, without penalty. Any other modification — different withdrawal amount, additional contributions, or stopping early — busts the SEPP and triggers the 10% penalty retroactively on all distributions, plus interest."
    },
    {
      "q": "What interest rate can I use for the amortization method?",
      "a": "IRS rules cap it at 120% of the federal midterm rate published for either of the two months before the payment start date. This rate moves with market conditions, so check the current published rate rather than assuming last year's number applies."
    },
    {
      "q": "Is 72(t) a good idea for early retirement?",
      "a": "It works when you need income only from retirement accounts and have no other bridge (like taxable brokerage funds or Roth contributions). Because it locks you into years of fixed distributions from a specific account, most FIRE planners treat it as a last resort after taxable accounts and Roth basis are exhausted."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/inherited-ira-10-year-rmd",
    "https://www.revenuelab.fyi/toolbox/nqdc-deferred-comp-payout",
    "https://www.revenuelab.fyi/toolbox/asset-location-tax-efficiency"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — 72(t) SEPP Withdrawal Calculator (https://www.revenuelab.fyi/toolbox/sepp-72t-withdrawal)"
}