Substantially Equal Periodic Payments
Avoid the 10% Early Distribution Penalty with Substantially Equal Periodic Payments
Unexpected financial hardships may force you to withdraw assets prematurely before the age of 59 1/2yrs. You may owe income tax on these amounts and require to pay a 10% early distribution penalty.
The rules for Substantially Equal Periodic Payments (SEPPs) are stated in the United States IRS code. Referrer to section 72(t) for receiving payments without the 10% early distribution penalty for your retirement plan. For information regarding deferred annuity before the age of 59 1/2yrs, refer to IRS code 72(q).
Substantially equal periodic payments allows the individual to withdraw funds from an IRA early without the associated taxes or penalties. Substantially equal periodic payments are calculated over the IRA owner's life expectancy, investment returns, and interest.
If your financial needs are in shorter term, substantially equal periodic payments is most likely not the appropriate answer for your needs.
Here are some the ways to avoid the 10% early distribution penalty on Your IRA:
- Serious illness or injury, long or expensive medical treatment
- In event of death of IRA owner
- Help pay for first home purchase
- Withdrawal is used to pay back taxes to the IRS
To browse our guides to Substantially Equal Periodic Payments click here.
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