72(t) SEPP Calculator

How it works

Withdrawals from an IRA before 59½ normally owe a 10% additional tax. Section 72(t)(2)(A)(iv) exempts a series of substantially equal periodic payments (SEPP) figured by one of three IRS methods (Notice 2022-6). Income tax is still due on every payment.

Required minimum distribution method: divide the balance by your life expectancy from the chosen table. The balance and age are updated every year, so the payment changes each year; this shows the first year. Fixed amortization: the level annual payment that pays the balance down to zero over your life expectancy at the interest rate you choose. Fixed annuitization: the balance divided by the cost of a $1-a-year life annuity at your age, from the IRS mortality table and the same rate. Both fixed methods pay the same amount every year.

The interest rate can be anything up to the greater of 5% and 120% of the federal mid-term rate for either of the two months before the first payment. Once started, the payments must continue unchanged until the later of five years after the first payment and age 59½. Changing them early (other than by death, disability, or a one-time switch to the RMD method) brings back the 10% tax on every payment so far, plus interest.

Formula

RMD method:      payment = balance ÷ life expectancy
amortization:    payment = balance × r ÷ (1 − (1 + r)^−LE)
annuitization:   payment = balance ÷ Σ_{t≥1} (survival to age + t) ÷ (1 + r)^t
rate limit:      r ≤ max(5%, 120% of federal mid-term rate)
must continue:   max(5 years, 59.5 − age)

Example

The IRS's own example: Bob is 50 with $400,000 in an IRA and chooses 4%, below the 5% limit. From the Single Life Table his life expectancy is 36.2 years, so the RMD method pays $400,000 ÷ 36.2 = $11,049.72 in the first year (the IRS rounds to $11,050).

Amortizing $400,000 over 36.2 years at 4% pays $21,101.63 a year (IRS: $21,102). The annuity factor at age 50 and 4% is 18.1568, so annuitization pays $22,030.33 (IRS: $22,030). At 50, the payments must continue for 9.5 years, to age 59½.

Assumptions and limitations

• Methods, tables and the rate limit are from IRS Notice 2022-6, for series starting in 2023 or later. Life expectancy uses the Single Life Table (26 CFR 1.401(a)(9)-9(b)) or the Uniform Lifetime Table (Notice 2022-6, Appendix A); annuitization uses the mortality rates in 26 CFR 1.401(a)(9)-9(e) with end-of-year payments, as in the IRS SEPP FAQ example.
• The Joint and Last Survivor Table, and annuity factors for two lives, are also allowed but not included here.
• The 120% mid-term rate changes monthly; enter the published annual figure for either of the two months before your first payment. The default is the October 2026 rate (5.54%), which applies to a first payment in November or December 2026; a series starting in October 2026 uses September's 5.40% or August's 5.23%.
• Payments are annual. Taking them monthly or quarterly is allowed if the year's total equals the annual amount; the monthly column is that total divided by 12.
• The years payments must continue are figured from your age in whole years; the exact end date depends on your birth date and the date of the first payment.
• The account must not receive contributions, transfers in or out, or rollovers while the series runs. Payments are still subject to income tax.
• This is an estimate for planning. It is informational and educational and is not financial, tax or legal advice; a mistake can trigger the recapture tax, so confirm your figures with a tax professional or your IRA custodian.

Frequently asked questions