1. What is the 72t Distribution?

The 72t distribution refers to substantially equal periodic payments from retirement accounts before age 59½ without incurring the 10% early withdrawal penalty. It's named after IRS rule 72(t).

2. How Does the Calculator Work?

The calculator uses the simple life expectancy method formula:

Where:

• \( Balance \) — Total retirement account balance
• \( Life\ Expectancy \) — Single life expectancy from IRS tables

Explanation: This method divides your account balance by your life expectancy to determine annual distributions.

3. Importance of 72t Distribution Calculation

Details: Accurate calculation is crucial for maintaining compliance with IRS rules and avoiding penalties while accessing retirement funds early.

4. Using the Calculator

Tips: Enter your total retirement account balance and your current life expectancy (from IRS Single Life Expectancy Table). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are the IRS-approved methods for 72t distributions?
A: Three methods are approved: Required Minimum Distribution (RMD) method, Fixed Amortization method, and Fixed Annuitization method. This calculator uses the RMD method.

Q2: How long must I continue 72t distributions?
A: You must continue for the longer of 5 years or until age 59½. Stopping early triggers retroactive penalties.

Q3: Can I change the distribution amount after starting?
A: Generally no - the amount must remain substantially equal. One-time switch to RMD method is allowed.

Q4: What happens if my account balance changes?
A: With the RMD method, distributions will change annually based on the new balance and updated life expectancy.

Q5: Are there other methods with different calculations?
A: Yes, the Fixed Amortization method uses an annuity factor and the Fixed Annuitization method uses an annuity table.