Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
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Updated July 28, 2026. Quick answer: The payment is calculated from the balance of the account the schedule runs on. Splitting the IRA before you start lets you size the payment to what you actually need and leave the remainder completely outside the schedule — free of its rules.
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.
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Why sizing matters so much
Run a schedule on a $1,000,000 IRA and the payment is calculated on $1,000,000, whether or not you need that much. Split off $400,000 first and the schedule runs on that, producing a smaller payment — and the other $600,000 remains an ordinary IRA you can leave alone.
| One account | Split first | |
|---|---|---|
| Payment | Calculated on the whole balance | Calculated on the carved-out portion |
| Rest of the money | Locked inside the schedule | Free — ordinary IRA |
| Room for a second schedule later | No | Yes, from the untouched account |
Split before the first payment. Splitting an account already running a schedule is a modification and busts it retroactively. This is a one-shot piece of sequencing and it is the single highest-value decision in setting one up.
The second-schedule option
Leaving a separate untouched IRA also preserves the ability to start a second schedule later if your needs rise — which is impossible if everything is already committed to one.
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.