72(t) SEPP.
Access your IRA early without penalty (with strict rules).
A 72(t) Substantially Equal Periodic Payments arrangement lets you withdraw from an IRAIndividual Retirement Account (IRA)A retirement account with tax advantages and eligibility rules. Traditional IRA contributions may be deductible; taxable withdrawals generally enter income. Roth contributions use after-tax money, and qualified Roth withdrawals are tax-free.Full definition before 59½ without the 10% penalty, subject to rigid rules. Modify the schedule early and the IRS retroactively applies the 10% penalty to every prior payment.
US-only. Section 72(t) is part of the US Internal Revenue Code. Other countries have different early-access rules.
72(t) is powerful but rigid. Once you start, you must continue the payments for 5 years OR until you reach 59½, whichever is longer. Modify the schedule early and the IRS retroactively imposes the 10% penalty on every payment, plus interest. Use it for IRAs (use Rule of 55 for 401(k)s).
On this page
Section 1 · What 72(t) is
IRS Code Section 72(t)(2)(A)(iv) allows penalty-free withdrawals from an IRA before age 59½ if you take "substantially equal periodic payments" (SEPP). This applies to IRAs and eligible employer plans. For an employer-plan SEPP, separation from service must occur before payments begin; IRA SEPPs do not require leaving a job. [1] Use the Rule of 55 for 401(k) early access verify×DON'T TRUST, VERIFYClaim: IRC 72(t)(2)(A)(iv) allows penalty-free withdrawals from IRAs in the form of substantially equal periodic payments.Verify at: IRS SEPP guidance ↗ Source 1 in the list belowNotice 2022-6 (and predecessors) provide the technical methods. Consult a CPA before implementing..
Section 2 · The three calculation methods
The IRS allows three approved methods. Each produces a different annual distribution.
Method 1: Required Minimum Distribution (RMD) method
- Simplest.
- Recalculated annually based on account balance and life-expectancy table.
- Annual payment varies year to year.
- Typically produces the smallest distribution.
Method 2: Amortization method
- Fixed annual distribution.
- Based on account balance, life expectancy, and a "reasonable" interest rate (IRS specifies the maximum allowable rate, currently 5% or 120% of the federal mid-term rate, whichever is greater).
- Typically produces a larger distribution than the RMDRequired Minimum Distribution (RMD)The minimum the IRS requires you to withdraw each year from traditional IRAs, 401(k)s, and similar accounts, generally starting at 73, or 75 if born in 1960 or later. It equals the prior December 31 balance divided by an IRS life expectancy factor. Roth IRAs and Roth 401(k)s have no RMDs during the owner's lifetime. method.
Method 3: Annuitization method
- Fixed annual distribution.
- Uses an annuity factor from IRS tables.
- Similar in result to amortizationamortizationThe process of paying off a loan through regular payments that cover both principal and interest.Full definition.
For most early retirees, the amortization method produces the most income and is the most commonly used.
Section 3 · The 5-year rule catch
You must continue payments for the LONGER of:
- Five years, OR
- Until you reach age 59½.
- Start at 45: must continue to 59½ (14.5 years).
- Start at 57: must continue to 62 (5 years, longer than the 2.5 years to 59½).
- Start at 55: must continue to 60 (5 years, longer than the 4.5 years to 59½).
If you stop, change the amount, or modify the schedule before the period ends: the IRS retroactively imposes the 10% penalty on every payment made, plus interest. This is the biggest risk: the income must be predictable for the full period.
Section 4 · Strategic uses (IRA segregation)
If you have $800,000 in IRAs and want to access $30,000/year via 72(t), do not put your whole IRA into the SEPP. Split the IRA:
- $500,000 IRA #1: 72(t) distribution producing approximately $30,000/year.
- $300,000 IRA #2: untouched, compounding.
Only IRA #1 is locked into the schedule. IRA #2 remains flexible verify×DON'T TRUST, VERIFYClaim: A 72(t) SEPP can apply to one segregated IRA while leaving other IRAs unrestricted.Verify at: IRS SEPP guidance ↗ Source 1 in the list belowStandard practice. The 72(t) schedule is calculated on the segregated IRA's balance only. Confirm with a CPA before implementing..
Implementing a 72(t) SEPP is technical. Use a CPA who has done it before. The cost of a mistake is the retroactive 10% penalty on every payment.
Withdrawal deadlines and account boundaries
US federal rules, checked September 17, 2026. For an owner’s IRA, the first RMD is generally due by April 1 of the year after the required starting-age year; later annual RMDs are due December 31. Delaying the first payment can put two RMDs into the following tax year. Use the prior December 31 balance and the correct IRS life-expectancy table. Employer plans may permit a later start until retirement for a non-5%-owner; confirm plan terms. Inherited accounts have separate rules. [2]
Calculate each IRA’s RMD separately, then eligible IRA amounts can generally be taken from one or more of those IRAs. Aggregate eligible 403(b) contracts only within that group. A 401(k) RMD generally must be satisfied separately for each plan, not from an IRA. Roth IRAs and designated Roth workplace accounts have no owner-lifetime RMDs (designated Roth relief applies from 2024); beneficiaries still have distribution rules. RMDs themselves cannot be rolled over. [2] [3]
An early-distribution exception removes the additional tax, not ordinary income tax on taxable withdrawals. Separation in or after the year of age 55 applies to the relevant employer plan, not an IRA; special public-safety rules can differ. SEPPs can cover IRAs or qualifying employer plans after separation from service. Before starting, confirm the calculation, account segregation and required duration with a qualified tax adviser. [1]
Birth-year qualification: 1959 is a special case
For owners born in 1951–1958 the starting age is 73, and for 1960 or later it is 75. The 2024 proposed IRS regulations specify age 73 for people born in 1959 to resolve overlapping statutory language; the cited CRS explanation flags that birth year separately. The calculator uses 73 as the proposed-rule planning assumption for 1959, not a claim that the proposal is final. Confirm the final rule with your administrator before the first distribution year. [4] [5]
Announcement 2026-7 separately delays applicability of certain other proposed RMD provisions and calls for a reasonable good-faith interpretation in the interim. It is not a waiver of ordinary owner RMD deadlines. [6]
Where to go from here
Sources
Bracketed numbers and verify badges in the text link to these sources. Figures, rates and rules change: check each source’s date before acting on it.
- IRS. Substantially Equal Periodic Payments (SEPP) guidance · irs.gov/retirement-plans/substantially-equal-periodic-payments. ↩
- Retirement plan and IRA required minimum distributions FAQs | Internal Revenue Service ↩
- Rollovers of retirement plan and IRA distributions | Internal Revenue Service ↩
- Federal Register :: Required Minimum Distributions+ ↩
- Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts | Congress.gov | Library of Congress ↩
- Internal Revenue Bulletin: 2026-11 | Internal Revenue Service ↩
- IRS Notice 2022-6. Updated SEPP methods · irs.gov.
Last updated . Educational content, not financial advice. Disclosures · How pages are reviewed