BiggerPockets Money Podcast How to Access Retirement Funds Early Using the 72(t) Strategy
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Jun 13, 2025 John Bowens, Director of Education at Equity Trust, shares his expertise on the 72(t) strategy for early retirement fund access. He breaks down the intricacies of Substantially Equal Periodic Payments (SEPP) and how to avoid hefty penalties for early withdrawals. Listeners learn critical compliance rules and the importance of investment strategy for utilizing retirement accounts effectively. John also discusses various distribution methods, including amortization and annuitization, and highlights the risks and planning needed for a successful retirement strategy.
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72(t) Rule Basics
- The 72(t) rule allows penalty-free early withdrawals from traditional IRAs and 401(k)s before age 59.5.
- It works through Substantially Equal Periodic Payments (SEPP) that must be consistent until age 59.5 or five years, whichever is longer.
Choose Your Withdrawal Method Wisely
- Choose one of three IRS-approved methods to calculate your SEPP withdrawals: Required Minimum Distribution (RMD), fixed amortization, or fixed annuitization.
- Stick to one method but you can switch once in your lifetime from amortization/annuitization to RMD to adjust to changing needs.
Split IRAs to Manage Risk
- Split large IRA balances into multiple accounts to create separate SEPP distributions and reduce risk associated with fixed withdrawal schedules.
- This strategy offers flexibility and can help manage the lock-in period by staggering withdrawals across accounts.