PSA: we tested the top 6 “72(t) calculator” results on Google. All of them fail the IRS’s own reference examples.

If you’re planning early retirement with a 72(t) SEPP distribution, you need accurate calculations.

We researched the topic and discovered something alarming: every popular calculator we tested produces incorrect results when compared to the IRS’s own published examples.

The IRS Reference Example:

• 50 years old, single life expectancy, 4% rate
• IRS Source ⁽¹⁾

What we found testing the top page Google results:

1. Bankrate – All three methods are off (2.92%, 5.416% and 5.377% instead of: 2.76%, 5.275% and 5.507%)
2. CalcXML – Annuitization: 5.22% (should be 5.51%)
3. MOAA – Annuitization: 5.22% (should be 5.51%)
4. Fidelity/SS&C – Annuitization: 5.22% (should be 5.51%)
5. Voya – Does not allow to enter the 4% acceptable rate only allows 0%. for that Annuitization seems a bit off (2.8808% vs 2.799%)
6. National Life – Annuitization: 5.22% (should be 5.51%)
   

Why this matters: 72(t) is one of the few ways to access retirement accounts before 59½ without the 10% penalty. Getting the calculation wrong means either:

• Distributing too much (potential issues with IRS, perhaps you’ll need a favorable private letter ruling if audited?)
• Distributing too little (leaving money locked up unnecessarily and potential minor IRS issues)

We built a 72(t) So-SEPP calculator and pre-loaded it with the matched IRS examples inputs so you can check the results yourself.

⁽¹⁾↩ Back – IRS reference examples:

Inputs:

• Age 50 in first year of distribution (2023)
• 4% rate chosen for fixed amortization and fixed annuitization methods
• Using RMD single life expectancy table

Reference Outputs:

• for the RMD method:
  • the first year withdrawal rate is 2.7624% (1 / 36.2)
  • the second year withdrawal rate is 2.8329% (1 / 35.3)
• for the amortization method:
  • the first year withdrawal rate is 5.2754% ( 1 / 18.9559) where 18.9559 is the computed amortization factor.
• for the annuitization method:
  • the first year withdrawal rate is 5.5076% ( 1 / 18.1568) where 18.1568 is the computed annuity factor.