Rule 72(t) — SEPP
retirementAlso known as: 72(t), rule 72t, SEPP, substantially equal periodic payments
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
SEPP is one of the few legal ways to access retirement funds early without penalty. Three IRS-approved calculation methods: (1) Required Minimum Distribution method (lowest annual payment), (2) Fixed Amortization (medium), (3) Fixed Annuitization (highest). Once you start, you must continue for 5 years or until 59½ (whichever is longer) — modifying or stopping early triggers retroactive 10% penalty plus interest on ALL prior payments. Used by FIRE-movement adopters and those who retire before 59½. Distributions are still taxed as ordinary income — only the penalty is avoided. Must be reported on Form 5329.
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