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: If you separated from service in or after the year you turn 55 and the money is still in that employer’s plan, the rule of 55 is simpler, more flexible and has no lock-in. 72(t) is the fallback when the money is in an IRA or you left earlier.
Side by side
| Rule of 55 | 72(t) SEPP | |
|---|---|---|
| Account | The 401(k)/403(b) of the job you left | IRA or plan |
| Age condition | Separated in or after the year you turn 55 | Any age |
| Amount | Whatever you want, whenever | A fixed schedule you must maintain |
| Lock-in | None | 5 years or until 59½, whichever is longer |
| Killed by | Rolling the money to an IRA | Any deviation from the schedule |
The most expensive mistake in this whole area: rolling the 401(k) to an IRA on the way out the door. It is the default advice everyone receives, and it permanently destroys rule-of-55 access to that money. Decide before you sign the rollover paperwork — see why an IRA cannot qualify.
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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The order to check
Rule of 55 first, because it is free and flexible. 72(t) only if the rule of 55 is unavailable — wrong account, or you left too early.
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.