A 72(t) substantially equal periodic payment (SEPP) lets you take penalty-free withdrawals from an IRA before age 59 ½ by following an IRS-approved schedule. Payments must be calculated using one of three methods — required minimum distribution, amortization, or annuitization — and must continue for five years or until you reach age 59 ½, whichever is later. Modifying the schedule, adding funds, or stopping early may trigger retroactive penalties plus interest. If you’re considering early retirement, a 72(t) SEPP may bridge the gap to age 59 ½, but the rigid rules make careful planning essential before you begin.
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