72(t) Articles

Can I Take More Than My 72(t) Distribution? Understanding SEPP Calculation

Are you considering early retirement, or do you need to tap into your retirement savings before reaching the age of 59.5? If so, you might be wondering about the 72(t) rule and whether it’s possible to take more than your 72(t) distribution. This blog post aims to shed light on this topic and help you understand the complexities of the Substantially Equal Periodic Payments (SEPP) calculation.

Understanding the Basics of a 72(t) Distribution

Before delving into whether you can take more than your 72(t) distribution, it’s essential to understand what a 72(t) distribution is. The term refers to Internal Revenue Code Section 72(t), which allows individuals under the age of 59.5 to withdraw funds from their retirement accounts without incurring the usual 10% early withdrawal penalty. However, these withdrawals must follow the IRS specific rules known as SEPP (Substantially Equal Periodic Payments).

The SEPP calculation determines the amount that can be withdrawn annually from a retirement account under this rule. The IRS provides three methods for calculating this amount: the Required Minimum Distribution method, the Fixed Amortization method, and the Fixed Annuitization method.

Can You Take More Than Your Calculated SEPP?

The short answer is yes; it is technically possible to withdraw more than your calculated SEPP. However, doing so comes with significant financial implications that may outweigh any immediate benefits.

If you take out more than your calculated SEPP before reaching age 59.5, all distributions taken under the rule will be subjected to a retroactive application of the standard 10% penalty for early withdrawal. This penalty applies not only to the excess amount but also all previous distributions made under Section 72(t). Additionally, interest may be charged on these penalties. Breaking a 72(t) SEPP can get expensive and cause unnecessary aggravation. 

Therefore, while it’s possible to withdraw more than your calculated SEPP, doing so could lead to substantial negative financial consequences that could impact your overall retirement savings.

What Happens If You Need More Money?

If you find yourself needing additional funds beyond your calculated SEPP, there are a few options available that won’t result in penalties:

1. Splitting Your Account:

One strategy involves splitting your retirement account into two or more separate accounts before starting your SEPP program. This way, if additional funds are needed in an emergency situation, they can be withdrawn from one of these separate accounts without affecting your ongoing SEPP program or incurring penalties. Talk to an experienced financial advisor about this strategy. 

2. Taking Loans From Your Retirement Account:

Some types of retirement accounts allow for loans against their balance without triggering penalties or taxes as long as they are repaid within specified time frames.

3. Other Sources Of Income:

Consider other sources of income such as part-time work or passive income from investments outside of your retirement account.


While it’s technically possible to take more than your calculated SEPP under a 72(t) distribution plan, doing so can lead to significant financial penalties that could undermine your overall retirement savings strategy. Therefore, it’s crucial to carefully consider alternative options if you find yourself needing additional funds beyond what has been calculated for distribution under Section 72(t).

Remember that navigating through complex financial decisions like this often requires professional guidance. Therefore, always consult with a financial advisor or tax professional when considering changes to your retirement distribution plans.

A quick phone call will help you determine if this is right for you