Retirement calculator

Free 72(t) sepp calculator

Estimate the substantially equal periodic payments that let you tap a retirement account before 59½ without the 10% penalty — updated live, as you type.

On this page11 sections

InputsLive

What do you want to find?

Starting balance

Annual withdrawal

Expected return

Result

Your money lasts

23 yr 9 mo

Withdrawing $40,000 a year from $500,000 at 6%, the balance reaches zero in about 23.8 years.

First-year interest$30,000

Total withdrawn$951,844

Withdrawal rate8%

Depletion timeline

Year	Start balance	+ Growth	− Withdrawal	End balance
1	$500,000	$30,000	$40,000	$490,000
2	$490,000	$29,400	$40,000	$479,400
4	$468,164	$28,090	$40,000	$456,254
7	$430,247	$25,815	$40,000	$416,062
10	$385,087	$23,105	$40,000	$368,192
13	$331,301	$19,878	$40,000	$311,179
16	$267,240	$16,034	$40,000	$243,275
19	$190,943	$11,457	$40,000	$162,400
22	$100,073	$6,004	$40,000	$66,077
24	$30,042	$1,803	$31,844	$0

Estimates only, on a constant return and fixed withdrawal. Not financial advice.

Results are estimates. Consult a professional.

Definition

What is a 72(t) SEPP withdrawal?

A 72(t) SEPP is a way to pull money out of an IRA or retirement plan before age 59½ without paying the 10% early-withdrawal penalty. The name comes from Internal Revenue Code section 72(t), and SEPP stands for "substantially equal periodic payments." This 72(t) calculator estimates the annual penalty-free withdrawal you could lock in for your account balance, age, and the interest rate the IRS allows.

Normally, distributions from a traditional IRA or 401(k) before 59½ trigger a 10% additional tax on top of ordinary income tax. A 72(t) SEPP is one of the named exceptions: if you commit to taking a fixed, formula-driven amount every year for a set period, the penalty is waived. The catch is the commitment — once you start, you generally cannot stop or change the payments without triggering retroactive penalties.

The Internal Revenue Code section that lists exceptions to the 10% additional tax on early retirement-account distributions.

Substantially equal periodic payments — the schedule of fixed annual withdrawals that qualifies for the 72(t) exception.

An extra 10% tax on distributions taken before age 59½, on top of regular income tax — the cost a SEPP avoids.

Any change to the payment schedule before the lock-in period ends; it retroactively re-imposes the penalty plus interest.

How it works

How a 72(t) SEPP avoids the early-withdrawal penalty

The 10% penalty exists to discourage tapping retirement money early. Section 72(t)(2)(A)(iv) carves out an exception for a series of substantially equal periodic payments taken over your life expectancy. Because the payments are spread out like a pension rather than grabbed as a lump sum, the IRS treats them as genuine retirement income and waives the penalty.

Annual SEPP (amortization) = balance × r / (1 − (1 + r)^−n)

r = IRS-permitted interest rate (capped at 5%)

n = life expectancy in years

IRS — Substantially equal periodic payments: the three methods and the 5% interest-rate limit (Notice 2022-6).

You must keep the payments going for the longer of five years or until you reach age 59½. Start a SEPP at 55 and you are locked in until 60; start at 50 and you are locked in until 59½. Stopping or changing the amount early reinstates every penalty you avoided, plus interest.

Inputs

How to use the 72(t) calculator

Three inputs drive the estimate, and the result updates live:

Account balance — the value of the IRA or plan you will draw the SEPP from. You can split a large account and base the SEPP on only part of it.
Age — your current age, used to set the life-expectancy factor. The younger you are, the longer the payout period and the smaller each payment.
Federal mid-term rate — the interest rate the IRS lets you assume, capped at 5% under current guidance. A higher rate produces a larger payment.

The calculator returns the annual and monthly penalty-free withdrawal. To see how the three IRS methods change that number, use the calculation-detail page below.

Worked example

A worked 72(t) example at age 55

Example: $500,000 IRA, age 55, 5% rate

Priya is 55 and wants penalty-free income from her $500,000 IRA until she turns 60. Using the amortization method at the maximum 5% rate, here is what the calculator returns.

Step 1 — Set the life-expectancy period

At age 55 the calculator uses a life-expectancy factor of 29.5 years as the amortization term.

Step 2 — Amortize the balance

Annual = 500,000 × 0.05 / (1 − 1.05^−29.5)

Annual = 32,769.32

Monthly = 32,769.32 / 12 = 2,730.78

$2,730.78/mo — $32,769.32/yr penalty-free

Priya can withdraw $32,769.32 a year (about $2,730.78 a month) without the 10% penalty — but she must keep taking exactly that amount until age 60 (the longer of five years or 59½). The calculator shows the monthly and annual figures side by side.

Scenarios

Who benefits from a 72(t) SEPP — and who should not use one

A SEPP suits a specific situation: you need steady income before 59½ and have no penalty-free alternative. It is a poor fit if your needs are lumpy or likely to change.

Good fit — early retirees. Someone who stops working at 52–57 and needs a predictable bridge to 59½ or to Social Security.
Good fit — large IRA, fixed need. You can carve a SEPP from part of an account, leaving the rest untouched and penalty-free for emergencies.
Poor fit — uncertain cash needs. Because you cannot change the amount, a SEPP is risky if your income needs swing year to year.
Poor fit — those near 59½. If you are within a year or two, it is often simpler to wait and avoid the rigid lock-in entirely.

Other 72(t) exceptions may fit better than a full SEPP — disability, certain medical expenses, a first home (IRA, up to limits), or qualified higher-education costs can each avoid the penalty without a multi-year commitment. Compare against simply paying the penalty with the early withdrawal penalty calculator.

Gotchas

72(t) mistakes that re-impose the penalty

Stopping early. Ending the SEPP before the longer of five years or age 59½ retroactively applies the 10% penalty to every prior distribution, plus interest.
Changing the amount. Taking more or less than the calculated payment is a "modification" that busts the plan — except for the one permitted one-time switch to the RMD method.
Adding or rolling money into the SEPP account. Contributions or rollovers into the account funding the SEPP can be treated as a modification.
Picking the wrong account size. Once set, the schedule is fixed; size the SEPP account so the payment matches your real need.
Forgetting it is still taxable. A SEPP only avoids the 10% penalty — the withdrawals are still ordinary income.

Accuracy

Accuracy, assumptions, and sources

This 72(t) calculator uses the fixed amortization method with a life-expectancy factor and an interest rate capped at 5%, consistent with IRS Notice 2022-6. The actual life-expectancy table, the maximum allowed rate, and your eligibility depend on current IRS guidance and your specific facts. A busted SEPP is expensive, so this is a planning estimate, not tax advice — work with a tax professional before starting one and verify the rules at the IRS links below.

IRS — Substantially equal periodic payments (72(t) SEPP) overview and the three methods.IRS Notice 2022-6 — Determination of substantially equal periodic payments; 5% interest-rate limit.

Questions

Frequently asked questions about the free 72(t) sepp calculator

A 72(t) SEPP calculator is a free online tool that helps you calculate substantially equal periodic payments under IRC §72(t). Avoids the 10% early-withdrawal penalty for IRA distributions before 59½. It runs entirely in your browser with instant results and no sign-up.

A 72(t) SEPP is a series of substantially equal periodic payments from an IRA or retirement plan that lets you withdraw money before age 59½ without the 10% early-withdrawal penalty. It is one of the exceptions named in Internal Revenue Code section 72(t).

You must keep taking the payments for the longer of five years or until you reach age 59½. Start at 55 and you are committed until age 60; start at 50 and you are committed until 59½.

Stopping or changing the amount before the lock-in period ends is a 'modification' that retroactively re-imposes the 10% penalty on every distribution you took, plus interest. The only allowed change is a one-time switch from a fixed method to the RMD method.

No. A SEPP only waives the 10% early-withdrawal penalty. The withdrawals are still taxed as ordinary income in the year you take them.

Under IRS Notice 2022-6, the fixed amortization and fixed annuitization methods may use any interest rate up to a 5% maximum. A higher rate within that cap produces a larger penalty-free payment.

About

About this 72(t) SEPP calculator

This 72(t) calculator estimates the substantially equal periodic payment you can take from an IRA or retirement plan before age 59½ without the 10% early-withdrawal penalty. It uses the fixed amortization method on the balance, age, and IRS-permitted rate you enter and returns the annual and monthly amount.

See our full set of retirement calculators or the complete calculators directory. A busted SEPP is costly, so use this as a planning estimate, not tax advice.