Free 72(t) / SEPP calculator
A 72(t) calculator (Substantially Equal Periodic Payments, or SEPP) answers the early retiree's classic problem: your money is in a 401(k) or IRA, you're under 59½, and touching it normally costs a 10% penalty. Rule 72(t) is the IRS's escape hatch — commit to a fixed annual withdrawal, computed by an IRS formula, and the penalty disappears. Coastline models the real formula inside a full retirement projection, so you see not just the payment but whether the whole plan works.
How the 72(t) payment is computed
The most-used method is amortization: your balance is amortized over your IRS single-life expectancy at a capped interest rate (120% of the federal mid-term rate), like a mortgage in reverse. Two things matter:
- The payment is fixed. Once elected, you must take (almost exactly) the same amount every year until age 59½ or for 5 years, whichever is LONGER. A 50-year-old is committing to nearly a decade.
- Busting the plan is expensive. Miss a payment, take extra, or stop early, and the IRS retroactively applies the 10% penalty to EVERY withdrawal you made under the plan, plus interest.
Is a 72(t) worth it? The honest answer
In this scenario the SEPP avoids about $59,000 of penalties — but notice it doesn't avoid all of them: spending $55,000/yr exceeds the $48,200 SEPP amount, and anything drawn above the formula is still penalized. That's the calculator's real job: showing how the fixed payment interacts with your actual spending, taxes, and other accounts. Some findings that surprise people:
- You still pay ordinary income tax on every withdrawal — 72(t) only removes the 10% penalty, not the tax.
- A smaller lifetime tax bill is possible. Drawing the 401(k) earlier (at low-income-year rates) shrinks the balance that RMDs will force out at higher rates after 73 — the same logic as Roth conversions.
- Alternatives are often better. A taxable brokerage bridges the gap with no strings; a governmental 457(b) is penalty-free after separation at any age with no fixed-payment handcuffs; Roth contributions come out penalty-free anytime; and a Roth conversion ladder unlocks money 5 years after each conversion. A SEPP is the tool of last resort when the money is truly trapped.
How Coastline models it
| Rule | In the calculator |
|---|---|
| Amortization-method payment | Computed from your balance and age the year the plan starts, using single-life expectancy and the capped rate |
| Penalty-free up to the SEPP amount | Pre-59½ 401(k) draws up to the payment carry no penalty; draws beyond it show the 10% penalty line |
| Ordinary tax still due | Every withdrawal stacks into your federal + state brackets in the year-by-year math |
| Whole-plan effect | Toggle the election on and off and compare lifetime taxes, RMDs, and ending net worth |
Why Coastline's version is different
Most free calculators hand you a single headline number with the assumptions hidden. Coastline is built the opposite way:
- Real tax math, not a flat rate. It applies federal and state income tax, long-term capital-gains rules, and account-by-account treatment (taxable, traditional, Roth) — in both your working years and retirement.
- The whole journey. It models accumulation (saving and investing) and drawdown (spending it down), so you see how the plan connects end to end, not just one half.
- The math is shown. Every figure has a click-through breakdown of how it was computed — a level of transparency even paid tools rarely expose.
- US and Canada. It natively handles Canadian plans (RRSP, TFSA, CPP, OAS) alongside US accounts, which most calculators ignore.
- Free, no signup. No account, no email, no account-linking. Your inputs run the projection and are then discarded.
Educational, not tax advice. 72(t) plans have strict execution rules (payment methods, timing, documentation) and busting one is costly — work with a professional before electing. Figures above assume the amortization method at the capped rate for a single filer in a no-income-tax state.
Common questions
What is a 72(t) SEPP plan?
An IRS rule letting you withdraw from a 401(k) or IRA before 59½ without the 10% early-withdrawal penalty, by committing to Substantially Equal Periodic Payments — a fixed annual amount computed by an IRS formula — until 59½ or for 5 years, whichever is longer. Ordinary income tax still applies.
How much can I withdraw under 72(t)?
It depends on your balance, age, and the IRS rate cap. Under the common amortization method, a 50-year-old with $800,000 can take roughly $48,200 per year. The payment is fixed once elected — you cannot dial it up in an expensive year without busting the plan.
What happens if I break a 72(t) plan?
The IRS retroactively applies the 10% penalty to every withdrawal you took under the plan, plus interest — potentially years of penalties at once. That all-or-nothing risk is the main reason to treat a SEPP as a last resort and to model it carefully first.
Is a 72(t) better than a Roth ladder or taxable account?
Usually not, if you have alternatives: taxable brokerage money has no penalty at any age, Roth contributions come out free anytime, a governmental 457(b) is penalty-free after separation, and a Roth conversion ladder unlocks funds after 5-year waits. A SEPP shines only when most of your money is trapped in a 401(k)/IRA and you retire well before 59½.