72(t) SEPP calculator: three methods, one decision you'll live with for years

By Tom, CPA · Updated October 25, 2026

TL;DR: Enter the IRA balance, your life expectancy factor and an interest rate, and this calculator estimates annual 72(t) payments under the RMD, amortization and annuitization methods. It caps the rate at the greater of 5% or 120% of the federal mid-term rate, per IRS Notice 2022-6.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

A 72(t) plan, also called substantially equal periodic payments (SEPP), lets you take money from an IRA before 59½ without the 10% additional tax, as long as you follow an IRS formula exactly. The hard part isn’t the formula; it’s choosing a payment you can live with for years. This calculator shows all three methods side by side so you can pick the one that doesn’t bust your budget, or your plan.

CPA Warning Label: A 72(t) plan must run for the longer of five years or until age 59½. Changing payments early triggers the 10% additional tax retroactively, plus interest. Confirm the factor, rate and method with a professional before the first payment.

Inputs

• IRA balance: the balance of the account(s) you include, usually as of a date shortly before the first payment (for example, December 31 of the prior year). You can split an IRA first so only part of your savings is in the plan.
• Life expectancy factor: from the IRS Single Life Table (or Uniform Lifetime or Joint and Last Survivor table) in Publication 590-B. Examples from the Single Life Table: age 50 = 36.2, age 55 = 31.6, age 56 = 30.6.
• Federal mid-term rate: the IRS publishes this monthly in its applicable federal rate (AFR) revenue rulings. Use either of the two months before the first payment.
• Chosen rate: any rate up to the cap. A higher rate gives a higher payment.

The defaults are examples, not recommendations.

RMD, amortization, annuitization methods

The calculator shows the RMD method’s year-one payment only. The annuitization result is an approximation (an annuity-due version of the amortization formula); the exact method uses the mortality table in Notice 2022-6, so expect small differences. You can switch once from either fixed method to the RMD method without busting the plan.

Interest rate rule

Under Notice 2022-6, the rate for the fixed methods can be any rate up to the greater of (1) 5% or (2) 120% of the federal mid-term rate for either of the two months immediately before the month of the first payment. With mid-term rates near 4%, 120% is about 4.8%, so 5% becomes the cap. If the mid-term rate rises to 4.5%, the cap becomes 5.4%. The calculator applies this cap automatically and shows the rate actually used.

Interpreting results

Illustration with the example defaults: a $500,000 IRA, factor 36.2 (age 50), and a 5% rate.

• RMD method: about $13,812 in year one.
• Amortization: about $30,156 a year, fixed.
• Annuitization (approximation): about $28,720 a year.

That’s a big spread. Frugal Fran, who has a taxable account for extra spending, might prefer a modest payment and could even pick a lower rate on purpose. Lavish Larry, who wants every dollar, would pick amortization at the cap, then discover a bad market year can’t pause the payment. If you need less, split the IRA and run the plan on a smaller balance rather than choosing a method that pays too much.

Choosing the balance to include

Because the plan applies only to the accounts you name, splitting an IRA before you start is the main tuning knob. Work backward: decide the annual payment you need, then solve for the balance that produces it under your chosen method and rate. For example, if amortization at 5% over 36.2 years pays about 6% of the balance, a $24,000 need suggests roughly a $400,000 account. Keep the rest in a separate IRA for conversions or later flexibility.

Records to keep

Keep a one-page record of the plan: start date, accounts included, balance and valuation date, method, life expectancy table and factor, interest rate and the AFR month it came from. If the IRS ever asks, that page shows the payments were substantially equal from the start.

Caveats

• Payments are taxable as ordinary income; the plan only avoids the 10%.
• No extra withdrawals, contributions or rollovers into the 72(t) account during the plan period.
• Follow the exact calculation each year (RMD method) and keep records; you’ll claim the exception on Form 5329.
• Life expectancy tables and AFRs change; check the current ones before you start.
• This tool is for education. It doesn’t know your full situation.

See also the early access guide, the HSA as a retirement account, the pro-rata calculator, and the contribution limits calculator.