72(t) SEPP Calculator

A 72t calculator estimates substantially equal periodic payments under Section 72(t). It compares IRS calculation methods using your account balance, age, life-expectancy assumptions and permitted interest rate, then models the required payment period and account balance.

IRS Notice 2022-6 describes the required minimum distribution, fixed amortization and fixed annuitization methods. RMD divides the applicable balance by a life-expectancy factor, amortization calculates a level payment over life expectancy, and annuitization uses an IRS mortality-based annuity factor.

For fixed amortization and fixed annuitization, the selected rate may not exceed the greater of 5% or 120% of the federal mid-term rate for either of the two months immediately preceding the first payment month.

No. Notice 2022-6 provides a 5% floor for the permitted maximum-rate calculation. When the relevant 120% federal mid-term rate is above 5%, the permitted ceiling can also be above 5%.

The series generally must remain unmodified until the later of the fifth anniversary of the first SEPP payment or the date you reach age 59½. Starting close to age 59½ can therefore require payments beyond age 59½.

IRS guidance allows the required annual amount to be taken in installments such as annual, quarterly or monthly payments, subject to the account custodian or plan trustee. The installments for the year should total the required annual amount.

Potentially. Current IRS guidance requires separation from service with the employer maintaining certain qualified plans before SEPP payments begin for the exception to apply. Employer-plan distribution rules also need to permit the distributions.

The employer-separation condition described by the IRS for certain qualified employer plans does not apply in the same way to IRAs. Other SEPP requirements still apply to the IRA series.

No. IRS guidance states that each SoSEPP is determined for one single account. Separate SoSEPPs may potentially be established for separate accounts, but each series must be calculated and managed independently.

Current IRS guidance generally does not allow additions to the account after the SoSEPP is established, other than changes resulting from investment experience. Account transfers, additional distributions and rollover activity can also affect the modification rules.

Yes. Notice 2022-6 allows a one-time switch from fixed amortization or fixed annuitization to the RMD method in a later distribution year without that switch itself being treated as a modification. Afterward, the RMD method must continue.

The special one-time method-change rule runs in the other direction: from a fixed method to RMD. A later change away from RMD can constitute a modification under the applicable rules.

If the series is modified before the required period ends, the IRS can impose the 10% additional tax on applicable distributions and a recapture tax for prior distributions that previously used the SEPP exception, plus interest.

IRS guidance provides special treatment when assets are completely depleted while following a qualifying SEPP method. A reduced final payment caused by complete depletion is not automatically treated as a modification.

The SEPP exception concerns the 10% additional early-distribution tax. Taxable traditional IRA or employer-plan distributions may still be included in ordinary income and subject to applicable income taxes.

The required balance depends on your age, selected life-expectancy basis, SEPP method and permitted interest rate. Use the target-income solver to compare the modeled account balance associated with a $40,000 annual payment under each method.

72(t) SEPP uses a structured series of substantially equal periodic payments. The Rule of 55 is a separate separation-from-service exception for applicable employer-plan distributions. Eligibility, account types and payment flexibility differ.

Starting another job does not by itself change the statutory SEPP duration. The series generally must remain unmodified until the later of the required five-year anniversary or age 59½ unless another applicable rule applies.