For individuals using retirement accounts, planning for financial stability during their post-employment years is crucial. One strategy often employed is the Substantially Equal Periodic Payments (SEPP) method, also known as 72(t), which allows individuals to access their retirement funds penalty-free before reaching the age of 59 ½. In 2024, there are notable changes and considerations regarding SEPP that retirees and those planning for retirement should be aware of.

What are Substantially Equal Periodic Payments (SEPP) or 72(t)?

Substantially Equal Periodic Payments, commonly referred to as 72(t) after the Internal Revenue Code Section 72(t), allow individuals to withdraw funds from their IRA or 401(k) without incurring the 10% early withdrawal penalty typically applied to distributions taken before the age of 59 ½. To qualify for SEPP, individuals must commit to withdrawing funds for a minimum of five years or until they reach age 59 ½, whichever is later. The amount withdrawn must be substantially equal and calculated based on IRS-approved methods.

Changes for 2024:

In 2024, there are several changes and considerations surrounding SEPP, also known as 72(t), that retirees and pre-retirees should understand:

1. Updated Life Expectancy Tables: The IRS periodically updates life expectancy tables used to calculate SEPP withdrawals. These tables determine the amount that can be withdrawn annually based on the individual’s age and life expectancy. It’s important to use the most current tables to ensure compliance with IRS regulations and to maximize the potential benefit of SEPP withdrawals.

2. Impact of Interest Rates: SEPP calculations are heavily influenced by interest rates. Lower interest rates result in lower withdrawal amounts, while higher rates permit larger withdrawals. With interest rates fluctuating, individuals considering SEPP must carefully assess the current economic environment and its potential impact on their withdrawal amounts.

3. Flexible Withdrawal Options: While SEPP requires consistent annual withdrawals for a minimum of five years or until age 59 ½, whichever is longer, individuals have the flexibility to adjust the withdrawal amount within certain limits. Once SEPP withdrawals begin, individuals can modify the withdrawal amount annually, subject to IRS guidelines. This flexibility allows retirees to adapt to changing financial needs and market conditions.

4. Impact of Market Volatility: Market fluctuations can significantly impact retirement account balances, potentially affecting the sustainability of SEPP withdrawals. During periods of market volatility, individuals relying on SEPP must carefully monitor their account balances and withdrawal rates to ensure long-term financial stability. Adjustments to withdrawal amounts may be necessary to mitigate the effects of market downturns on retirement savings.

5. Consultation with Financial Advisors: Given the complexities of SEPP calculations and the potential tax implications of early withdrawals, individuals are encouraged to seek guidance from financial advisors or tax professionals before initiating SEPP withdrawals. A qualified advisor can help individuals understand the intricacies of SEPP, optimize withdrawal strategies, and navigate IRS regulations to ensure compliance.


Substantially Equal Periodic Payments (SEPP), also known as 72(t), offer individuals a valuable opportunity to access retirement funds penalty-free before reaching the age of 59 ½. However, changes in life expectancy tables, interest rates, market volatility, and IRS regulations can significantly impact SEPP withdrawals. As individuals plan for retirement and consider SEPP as part of their financial strategy, it is essential to stay informed about changes in regulations and consult with financial professionals to make informed decisions. By understanding the nuances of SEPP and carefully managing withdrawal strategies, individuals can maximize the benefits of their retirement savings while maintaining long-term financial security.