Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Updated July 28, 2026. Quick answer: The 10% additional tax is applied retroactively to every distribution you took under the schedule, plus interest — not just to the year you broke it. On a schedule running several years that can be a very large single bill.
Retroactive, not prospective
This is what makes busting so expensive and so misunderstood. People assume breaking the schedule means the penalty applies going forward. It applies backward, to everything already taken, with interest for the years since.
Ways people bust one without meaning to
- Taking an extra distribution in a tight year.
- Rolling the account, or part of it, to another IRA.
- Adding money to the account.
- A custodian error in the payment amount.
- Stopping because the account fell and the fixed payment looked unsustainable.
That last one is the cruel case: the schedule is most likely to feel unaffordable exactly when stopping is most expensive. The intended remedy is the one-time switch to the RMD method, not stopping — but you have to know it exists before you panic.
Get a second opinion before you lock in a schedule
An early-withdrawal schedule commits you for years and is expensive to break, so it is worth having someone check the amount, the account it runs on and the alternatives against the rest of your plan first.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide is paid when you submit the form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here. You stay on this page.
What happens when you press the button
It asks about nine questions (age, investable assets, location), then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button. Submitting the form does not guarantee an adviser or a match. This matching form is not tax or legal advice.
Ring-fence the account
Use a dedicated IRA for the schedule and nothing else. No contributions, no rollovers in or out, no partial transfers. Split before you start, not after — splitting afterwards is itself a modification.
Sources
IRC §72(t) (10% additional tax and its exceptions); IRC §72(t)(2)(A)(iv) (substantially equal periodic payments); IRC §72(t)(2)(A)(v) (separation from service at 55); Rev. Rul. 2002-62; Notice 2022-6. Cross-checked July 2026 against professional analyses. Interest rates published for these calculations change monthly and are described structurally here rather than quoted.
This states what the cited authority says. It is not tax advice, and a SEPP schedule is unusually unforgiving of small errors.
Related
What the series would actually pay: the SEPP calculator gives the fixed-amortization and RMD-method payments from the regulation’s own life expectancy table, tells you which leg of the lock-in binds for your age, and prices what breaking it would cost — retroactively, across every payment.