72(t) SEPP Calculator

Calculate your 72(t) payment

Use the balance on your chosen valuation date and the age you reach in the first distribution year.

The interest rate rule, and the months it comes from

Two of the three methods need an interest rate, and you do not get to choose it freely. Section 3.02(c) of Notice 2022-6 states the ceiling: the rate “is any interest rate that is not more than the greater of (i) 5% or (ii) 120% of the federal mid-term rate (determined in accordance with section 1274(d) for either of the two months immediately preceding the month in which the distribution begins).”

Three things follow from that sentence. The 5% floor is part of the ceiling, so a series can always use 5% even when rates are low — that floor arrived with Notice 2022-6 and did not exist under the superseded Rev. Rul. 2002-62. You get to pick the better of two months, not one. And you may always use less: a lower rate produces a smaller payment under the amortization and annuitization methods, which is sometimes the point.

The federal mid-term rate is published every month in a Revenue Ruling. The 120% figure with annual compounding is the one used here, read from Table 1 of each ruling.

Rows are read from the ruling itself, and the table grows by one row a month. If your first distribution month is later than every month listed here, take the figure straight from the two rulings that precede it on the IRS applicable federal rates index and type it into the rate box.

The three methods, as Notice 2022-6 writes them

1. Required minimum distribution method

Section 3.01(a): the payment for each distribution year is the account balance for that year divided by the life expectancy factor for that year. Balance, factor and payment are all redetermined annually, so the payment moves with the market. No interest rate is involved. Recomputing each year is expressly not a modification, provided the method and the table stay the same.

This calculator reads the factor from the Single Life Table at 26 CFR §1.401(a)(9)-9(b), one of the three tables section 3.02(a) permits. The other two are the Uniform Lifetime Table reproduced in Appendix A of the notice and the Joint and Last Survivor Table at §1.401(a)(9)-9(d), which needs an actual designated beneficiary and their age. The Single Life Table gives the shortest distribution period of the three at a given age, and therefore the largest payment.

2. Fixed amortization method

Section 3.01(b): the payment is the level amount that amortizes the account balance over the life expectancy factor at a permitted interest rate. Balance, factor and payment are set once, in the first distribution year, and the payment then repeats unchanged every year. Written out, with B the balance, i the rate and n the factor:

payment = B × i ÷ (1 − (1 + i)⁻ⁿ)

3. Fixed annuitization method

Section 3.01(c): the payment is the account balance divided by an annuity factor — the present value of an annuity of $1 a year beginning at your age and continuing for your life — derived using the mortality rates in 26 CFR §1.401(a)(9)-9(e) at a permitted interest rate. Like amortization, it is computed once and then repeats.

This calculator carries the life expectancy tables from §1.401(a)(9)-9, but not the underlying mortality rates in paragraph (e) — and an annuity factor cannot be derived from a life expectancy alone. So the page shows no figure for the annuitization method. Anything it printed would be a number we made up, and a 72(t) series is the wrong place for one. To use this method, have the factor computed from the regulation’s mortality rates at the rate you have chosen.

Three rules that decide whether the series holds

Breaking it costs the whole series, not one year

Section 72(t)(4) is the reason a 72(t) is a commitment. As section 2.04 of Notice 2022-6 restates it: if the series is modified — other than by reason of death, disability, or a distribution to which section 72(t)(10) applies — before the end of the 5-year period beginning on the date of the first payment, or before you attain age 59½, then your tax for the first year of the modification is increased by the tax that would have been imposed but for the exception, plus interest for the deferral period.

Read the two clocks carefully: both must be satisfied, so they run to whichever ends later. Someone starting at 52 is committed until 59½, seven and a half years. Someone starting at 57½ is committed for five years, to 62½. And the recapture reaches back over every payment already taken, with interest — not just the year of the change. Taking an extra dollar out of the same account, stopping early, or adding money back all count as modification.

You get one change of method, in one direction

Section 3.03(b) permits an individual who began under the fixed amortization or fixed annuitization method to switch, in any later distribution year, to the required minimum distribution method — and that switch is not a modification. It is the release valve for a series set at a high fixed payment against a balance that has since fallen. It works once: after the switch, any subsequent change away from the required minimum distribution method is a modification under section 72(t)(4).

Split the account before the first valuation, or not at all

A 72(t) series attaches to the account it is calculated on, and section 3.02(e) closes that account off once the clock starts: after the balance is first valued, a modification occurs if there is any addition to it other than investment experience, any transfer of part of it to another retirement plan, or a rollover of an amount received. Section 3.02(d) sets the valuation window — any date from December 31 of the year before the first distribution through the date of the first distribution itself.

So the sizing decision comes first: split the IRA into a SEPP account and an untouched account before that valuation date, so the series is calculated on a balance that produces the payment you want, and the rest of the money stays outside the series entirely. Afterwards the same split is a modification.

One relief runs the other way. Section 3.03(a): if following a qualifying method exhausts the account, the smaller final payment and the end of payments are not a modification, and the section 72(t)(4)(A) recapture tax does not apply.

What this calculator does and does not model

• First-year payments only. The amortization figure repeats every year by design. The required minimum distribution figure is the first year’s; later years use that year’s balance and factor.
• Single Life Table only. The Uniform Lifetime and Joint and Last Survivor Tables are equally permitted and give longer distribution periods, so smaller payments. The joint table also requires an actual designated beneficiary.
• Single life, not joint lives. Section 72(t)(2)(A)(iv) allows a series measured on joint lives; this page measures one.
• Annuitization is not computed, for the reason given above.
• Income tax is separate. A 72(t) payment escapes the 10% additional tax; it is still ordinary income, and it still lands in your MAGI for marketplace subsidies.
• Partial-year and monthly schedules. Payments must be made not less frequently than annually; the figures here are annual totals.
• Nothing you type leaves your browser — the whole calculation runs on this page.

Common questions

What interest rate can I use for a 72(t) SEPP right now?

Section 3.02(c) of Notice 2022-6 caps the rate at the greater of 5% or 120% of the federal mid-term AFR for either of the two months immediately preceding the month in which the distribution begins. The 120% mid-term AFR (annual compounding) is 5.23% for August 2026 under Rev. Rul. 2026-13, 5.23% for July 2026 under Rev. Rul. 2026-12, and 4.97% for June 2026 under Rev. Rul. 2026-11. A series whose first distribution falls in September 2026 may therefore use any rate up to 5.23%. You may always use less.

What are the three 72(t) SEPP methods?

Section 3.01 of Notice 2022-6 lists them. The required minimum distribution method divides the account balance for each year by that year’s life expectancy factor, so the payment moves every year. The fixed amortization method amortizes the first year’s balance over the life expectancy factor at a permitted interest rate, and the payment then stays the same. The fixed annuitization method divides the balance by an annuity factor built from the mortality rates in 26 CFR §1.401(a)(9)-9(e) at a permitted interest rate, and that payment also stays the same.

What happens if I break a 72(t) SEPP?

Section 72(t)(4) applies if the series is modified before the end of the 5-year period beginning on the date of the first payment, or before you reach 59½, other than by reason of death, disability, or a distribution to which section 72(t)(10) applies. Your tax for the first year of the modification is increased by the 10% additional tax that would have applied to every payment in the series, plus interest for the deferral period. The recapture is retroactive to the whole series, not just to the year of the change.

Can I change 72(t) methods once payments have started?

One change only, and only in one direction. Section 3.03(b) of Notice 2022-6 lets someone who began under the fixed amortization or fixed annuitization method switch, in any later distribution year, to the required minimum distribution method, and that switch is not a modification. Once made, any subsequent change away from the required minimum distribution method is a modification under section 72(t)(4).

Should I split my IRA before starting a 72(t) SEPP?

Any split has to happen before the first valuation date. Under section 3.02(e) of Notice 2022-6 a modification occurs if, after the account balance is first valued, there is any addition to that balance other than investment experience, any transfer of part of it to another retirement plan, or a rollover of an amount received. Section 3.02(d) sets the valuation window: any date from December 31 of the year before the first distribution through the date of the first distribution.

What if the account runs out of money?

Section 3.03(a) of Notice 2022-6 says that if following a qualifying method exhausts the account, the smaller final payment and the end of payments are not a modification, and the section 72(t)(4)(A) recapture tax does not apply.