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<< I am trying to locate information of IRS Rule 72(t) and haven't had much luck. I contacted the IRS web site but did not find anything even close to what I am looking for. If I understand correctly, if you are less than 59 1/2 years old and take systematic withdrawals from your IRA over your life expectancy, the 10% penalty is waived. Can any of you fellow Fools point me in the right direction?

Here is an exerpt of 72(t)of the code:
10-percent additional tax on early distributions from qualified retirement plans

(1) Imposition of additional tax
If any taxpayer receives any amount from a qualified retirement plan (as defined in section 4974(c)), the taxpayer's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includable in gross income.

(Paragraph 1) shall not apply to any of the following distributions:
<snipped other exclusions> What follows addresses your concern:

(iv) part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and his designated beneficiary.

What follows is a description of the exception about which you inquire. It is in many IRS Publications but the main source is Publication 590 "Individual Retirement Arrangements."

Annuity exception. You can receive distributions from your IRA that are part of a series of substantially equal payments over your life (or your life expectancy), or over the lives of you and your beneficiary (or your joint life expectancies), without having to pay the 10% additional tax, even if you receive such distributions before you are age 59 1/2 . You must use an IRS-approved distribution method and you must take at least one distribution annually for this exception to apply. See Figuring the Minimum Distribution, later, for one IRS-approved distribution method, generally referred to as the “life expectancy method.” Unlike for minimum distribution purposes, this method, when used for this purpose, results in the exact amount required, not the minimum amount.
There are two other IRS-approved distribution methods that you can use. They are generally referred to as the “amortization method” and the “annuity factor method.” These two methods are not discussed in this publication because they are more complex and generally require professional assistance. See IRS Notice 89-25 in Internal Revenue Cumulative Bulletin 1989-1 for more information on these two methods. This notice can be read in many libraries and IRS offices. The payments under this exception must continue for at least 5 years, or until you reach age 59 1/2 , whichever is the longer period. This 5-year rule does not apply if a change from an approved distribution method is because of the death or disability of the IRA owner.
If the payments under this exception are changed before the end of the above required periods for any reason other than the death or disability of the IRA owner, he or she will be subject to the 10% additional tax. For example, if you received a lump-sum distribution of the balance in your IRA before the end of the required period for your annuity distributions and you did not receive it because you were disabled, you would be subject to the 10% additional tax. The tax would apply to the lump-sum distribution and all previous distributions made under the exception rule.
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