72(t) Payments Calculator

Notice 2022-6 · reviewed September 6, 2026

Computes the yearly withdrawal you can take from a retirement account before 59½ without the early-withdrawal penalty. About

In plain words. Taking money out of an IRA or 401(k) before age 59½ usually costs a 10 percent penalty on top of the tax. One exception lets you avoid the penalty by taking a fixed yearly amount, set by a formula from your balance, your age, and an interest rate, and keeping it up for at least five years or until 59½, whichever is later. This tool computes that amount two ways, and tells you how long you are committed.

Why it matters. For someone retiring in their fifties with most of their savings in retirement accounts, this is the legal way to live on them. The commitment is the part people underestimate: the payment is locked for years.

An example. With $500,000 at age 50 and the 5 percent rate the rules always allow, the level payment is about $30,200 a year, or about $13,800 in the first year by the recalculated method. Either way the series must run ten years, to age 60.

Where it stops. Once started, the payments cannot be changed without owing the penalty on all of them, back to the first one, with interest. The tool does not offer the third method, annuitization, which needs a mortality table and lands close to amortization. Everything it leaves out.

IRA balance the payments will come from

The payments are figured on one account. You can first split off a separate IRA holding just the amount you need.

Your age when payments begin

The IRS life expectancy table gives 36.2 more years at this age.

Interest rate used in the formula

The law caps it at the higher of 5% or 120% of the federal mid-term rate, a rate the IRS publishes monthly. 5% is always allowed.

Yearly payment by the fixed-amortization method

$30,156 a year

You would take that same amount every year, set once at the start. The other method, the required minimum distribution or RMD method, would pay $13,812 in the first year and be refigured each year from the balance. Either way the payments must continue for 10 years, until age 60, which comes to about $301,561 in all by the fixed-amortization method.

How long the payments must continue: 10 years; Until age 60, the later of five years and age 59½
Life expectancy in the formula: 36.2; Years remaining at 50 on the IRS Single Life Table
Penalty if you change or stop the payments early: 10%; Charged on every payment back to the first, plus interest

The fixed-amortization method gives a larger payment that never changes. The RMD method gives a smaller payment that moves with the balance. You are allowed one switch, from the fixed-amortization method to the RMD method, which is the safety valve if the account falls. Because the payments attach to one account, many people split off exactly the IRA needed for the income they want and leave the rest untouched.

This follows the IRS rules for substantially equal periodic payments from an IRA before age 59½, using the fixed-amortization and RMD methods on the Single Life Table, an interest rate capped at the higher of 5% or 120% of the federal mid-term rate, and the rule that changing the payments early brings back the penalty. It leaves out the annuitization method, the joint-life tables, and monthly payments. It does not figure the ordinary income tax on the payments themselves. Educational, not advice.

This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.

Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.