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SJLeftHand asks,

Although there usually are early-distribution Federal tax penalties for making tax-qualified plan distributions before age 59 1/2, I believe that there is a provision in the Federal tax law by which a taxpayer can avoid the penalties (but, of course, not the income taxes) by making substantially equal annual distributions for at least 5 years or through age 59 1/2, whichever is longer. If this scenario is correct, how can I determine what is the maximum allowable distribution assuming my current total assets under such tax-qualified plans is approximately $210K (with 15% annualized appreciation), and I currently am age 43? I believe that my life expectancy, which I do not know, is a quantity which I must consider in my calculations.

There is a free calculator on the Retire Early Home Page that shows you how to determine the amount of a "substantially equal periodic payment" (SEPP) using the 3 permissible methods. See link:


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