72(t) Distribution Calculator 2026 — Calculate Your SEPP Payment

A 72(t) distribution lets you take early withdrawals from a retirement account before age 59½ without paying the 10% early withdrawal penalty. The payment amount is set by one of three IRS-approved calculation methods under Notice 2022-6, and you must continue the same schedule for at least five years or until you reach 59½ — whichever is longer.

This calculator page provides illustrative estimates to help you understand how each method works. Because the exact payment depends on your chosen life expectancy table, the specific monthly IRS interest rate, and payment-timing conventions, use IRS-compliant SEPP software or a tax professional to calculate your actual payment before starting a plan — a miscalculation can trigger retroactive penalties on every payment already made.

The Three 72(t) SEPP Calculation Methods

The IRS permits three substantially equal periodic payment (SEPP) methods under IRS Notice 2022-6 (which superseded the older Rev. Rul. 2002-62). Each produces a different payment size. You must choose one before your first distribution.

Method 1: RMD Method

Payment = Account balance ÷ life expectancy factor

The account balance is recalculated each January 1. Because the balance and the life expectancy factor both change every year, so does the payment. This method is the most conservative — it preserves assets longest but produces the smallest income.

IRS Single Life Expectancy Table (Table I) Factors — from IRS Publication 590-B, Appendix B:

Notice 2022-6 also allows the Uniform Lifetime Table or the Joint and Last Survivor Table for the RMD and fixed amortization methods — the Single Life Table shown above (Table I) generally produces the smallest factor, and therefore the largest RMD-method payment, of the three options for an unmarried account owner.

Method 2: Fixed Amortization

Payment = Balance amortized over the chosen life-expectancy period at an IRS-approved interest rate

The payment is calculated once using the account balance on a set date, the number of years from your chosen life expectancy table, and an interest rate at or below 120% of the IRS federal mid-term applicable federal rate (AFR) for either of the two months preceding your first payment. Once set, the payment never changes (unless you make the one-time switch to the RMD method).

Method 3: Fixed Annuitization

Payment = Account balance ÷ IRS annuity factor

The annuity factor is derived from the official mortality rates in Treasury Regulation §1.401(a)(9)-9(e), not simply from the life expectancy figure used in the other two methods. Like the amortization method, the payment is fixed once calculated. The two fixed methods typically produce similar — but not identical — payments.

Illustrative Example: Age 52, $500,000 IRA

Situation: Jordan retired early at 52 with a $500,000 IRA and needs income before 59½. Using IRS Table I (Single Life Expectancy), age 52 life expectancy = 34.3 years. Jordan confirms the current IRS Section 1274(d) mid-term AFR for the month before the first distribution and uses 120% of that rate as the interest rate assumption in this example.

*The RMD-method figure ($500,000 ÷ 34.3) is a precise calculation. The two fixed-method figures are sensitive to the exact interest rate, the payment-timing convention, and the mortality table your SEPP software uses — treat them as directional only, not as numbers to rely on for an actual election.

The RMD method produces meaningfully less income than the fixed methods for this situation. Jordan must continue distributions until age 59½ — seven years.

Calculating Fixed Amortization Step by Step

1. Find the applicable federal rate (AFR) for the month you plan to begin — the IRS publishes this monthly on its Applicable Federal Rates page
2. Multiply by 120% to get the maximum allowed rate
3. Find your life expectancy from your chosen IRS table (Single Life, Uniform Lifetime, or Joint and Last Survivor)
4. Use a standard amortization formula: PMT = PV × [r / (1 − (1 + r)^−n)]
   • PV = account balance
   • r = annual interest rate
   • n = life expectancy in years from your chosen table
5. That annual figure is your fixed SEPP payment — verify it with IRS-compliant SEPP calculation software before committing, since the exact convention used (e.g., whether the first payment is assumed at the start or end of the year) affects the result by a few percent

How the Interest Rate Affects Your Payment

Holding the account balance and life expectancy constant, a higher IRS-approved interest rate produces a larger annual SEPP payment (and depletes the account faster); a lower rate produces a smaller payment. For example, on a $400,000 account amortized over a 35-year life expectancy, moving from a 4% to a 7% assumed rate meaningfully increases the payment — confirm the current month’s AFR-based rate and run the exact calculation with SEPP-specific software rather than relying on a rule-of-thumb table, since even small rate differences compound into materially different dollar figures over a multi-year SEPP commitment.

72(t) Taxes: You Still Owe Income Tax

Avoiding the 10% penalty does not mean avoiding income tax. Every SEPP distribution from a pre-tax IRA or 401(k) is ordinary income. A $30,000 annual SEPP payment is taxed just like wages. Plan your withholding carefully — SEPP distributions do not have automatic federal withholding unless you request it.

Common 72(t) Mistakes to Avoid

• Depositing to the SEPP account — any contribution restarts the clock and triggers modification penalties
• Missing a payment — even one missed or partial payment counts as a modification
• Miscalculating using the wrong AFR — use the rate for one of the two months before your first distribution
• Conflating separate accounts — SEPP runs on one account; keep the elected account separate from others

72(t) vs. Rule of 55 vs. Roth Ladder

The Rule of 55 is simpler if you left your employer in or after the year you turned 55. The 72(t) SEPP guide covers the full rules in detail.

Related Articles

• 72(t) SEPP Complete Guide 2026
• 401(k) Early Withdrawal Penalty 2026
• Rule of 55: Early 401(k) Withdrawals Without Penalty
• RMD Calculator 2026

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.