aceware,

What would be the penalty for having insufficient funds to make the 'substantially equal periodic payment' from a rollover IRA prior to age 59.5...

You seem to be asking a hypothetical question. Hope so.

Anyway, intercst addresses it in his FAQ on SEPP:

http://home.earthlink.net/~intercst/wdrawfaq.html

A brief excerpt: Nobody seems to know. I suspect the IRS position would be they'd want to assess the 10% penalty plus interest for all the previous annual distributions.

Suggest you read the rest of the answer, and plan accordingly.

Phooley