Your numbers
The IRS lets the fixed method use any rate up to the greater of 5% or 120% of the federal mid-term rate. Look up the current ceiling; this tool only warns above 5%. Payments are assumed to start each year on the anniversary of the first one.
Edit the numbers, then click Calculate.
Result
Year by year
| Year | Age | RMD method payment | Fixed amortization | RMD start balance | Amortization start balance | Penalty exposure if broken after this year |
|---|
How it is calculated
The lock-in is the later of 5 years and reaching age 59½. The RMD method pays the prior year-end balance divided by the IRS Single Life Table factor for your age that year (Treas. Reg. 1.401(a)(9)-9, Table I, effective 2022). The fixed amortization method pays the level amount that would pay off your balance over the life expectancy factor at your first age, at the interest rate you choose. Penalty exposure is 10% of the payments taken so far, which is what the additional tax would be if the schedule were modified. Remaining balances grow at your assumed return after each payment.
Not modelled: the fixed annuitization method (needs the IRS mortality table), the one-time switch from a fixed method to the RMD method, income and state tax, the exact federal mid-term rate, monthly payments, employer plans that have not been rolled to an IRA, joint life tables, and interest on a broken schedule. Unverified: checked by hand calculation and unit tests only; the life expectancy factors were entered from the regulation table and should be confirmed against the current IRS publication.
Common questions
What is Rule 72(t) and a SEPP?
Section 72(t) of the tax code adds a 10% additional tax to most withdrawals from an IRA or 401(k) before age 59½. One exception lets you avoid it by taking substantially equal periodic payments (SEPP) from an IRA, calculated with one of three IRS-approved methods. You still owe ordinary income tax on every payment.
How long do the payments have to continue?
For the later of five full years or until you reach age 59½. Someone who starts at 50 is locked in for 10 years; someone who starts at 57 is locked in for 5. The count is in payment years measured from the first payment, so check the exact end date with a professional.
What are the three SEPP methods and which does this tool model?
The RMD method divides the prior year-end balance by a life expectancy factor every year, so payments change each year. Fixed amortization pays a level amount computed as a loan over the life expectancy. Fixed annuitization pays a level amount using an annuity factor from an IRS mortality table. This tool models the RMD method and fixed amortization. Annuitization needs the IRS mortality table and usually lands close to amortization.
What interest rate should I enter?
For the fixed methods, the IRS lets you use any rate up to the greater of 5% or 120% of the federal mid-term rate for either of the two months before the first payment. A higher rate produces a higher payment, so most people use the maximum allowed. This tool does not know the current federal rate: it warns when you enter more than 5% and you must confirm the ceiling yourself.
What happens if I change or stop the payments?
If you modify the schedule before the lock-in ends (other than by death or disability), the 10% additional tax applies retroactively to every distribution you took under the plan, plus interest. The exposure table shows that 10% figure for each year you might stop. Interest is not modelled.
Why does the balance needed to fund my income differ by method?
The RMD method's first payment is the balance divided by roughly your remaining life expectancy in years, about 2.5% to 3.5% at ages 45 to 55. Fixed amortization at 5% pays about 5.5% to 6.5% of the starting balance. Amortization therefore needs a smaller account for the same income, but its payment can never adjust if markets fall.
Can I split my IRA to control the payment size?
Yes, many people carve out a separate IRA sized to the income they need and leave the rest untouched. The SEPP rules apply to the account you use for the schedule. The tool works on the balance you enter, so try a smaller balance to see the payment.
What does this leave out?
Income and state taxes, the exact federal mid-term rate, the one-time switch to the RMD method the IRS allows, the annuitization method, payments taken monthly rather than annually, a 401(k) that has not been rolled to an IRA, beneficiary or joint life tables, and interest on a broken schedule. It is arithmetic on figures you enter, not a plan.
Is my data uploaded anywhere?
No. Everything you type stays in this browser tab. There are no accounts, cookies or analytics vendors.