72(t) terms, defined

Applicable Federal Rate — the IRS-published interest rate used as a ceiling input: a SEPP interest rate cannot exceed the greater of 5% or 120% of the mid-term AFR in effect for the calculation.

The minimum time a SEPP must continue: the longer of 5 years from the first payment, or until the owner reaches age 59½. Stopping or modifying earlier can trigger penalty recapture.

A locked, timestamped snapshot of a completed calculation or verification. It is immutable; corrections produce a new versioned record linked to the prior one for a complete audit trail.

A SEPP method that amortizes the account balance over a life-expectancy period at a chosen interest rate, producing a level annual payment that stays fixed for the life of the schedule.

A SEPP method that divides the account balance by a derived actuarial annuity factor — the present value of a $1-per-year end-of-year lifetime annuity computed from the prescribed Treasury mortality table (Treas. Reg. §1.401(a)(9)-9(e), Table 4) and the selected interest rate. The resulting annual payment stays fixed for the life of the schedule. The IRS’s published worked example (Q&A 7) produces a factor of 18.1568 for age 50 at 4.00%.

Any change to a SEPP schedule before the commitment period ends (the later of 5 years or age 59½) other than an allowed adjustment. A modification reinstates the 10% early-distribution penalty retroactively for every year of distributions going back to the first payment — not just the year of modification — plus interest on each year’s tax.

The IRS notice that modernized SEPP guidance — including the interest-rate ceiling (the greater of 5% or 120% of the mid-term AFR) and the updated life tables. Notice 2022-6 governs SEPP series commencing on or after January 1, 2023, and is available by election for series commencing in 2022.

Required Minimum Distribution method: the annual payment is the account balance divided by the owner’s life expectancy from the IRS Single Life Table. It is the only method that recalculates each year, so the payment changes with the balance.

Substantially Equal Periodic Payments — the series of penalty-free distributions from a retirement account allowed under IRC §72(t) before age 59½, subject to approved calculation methods and continuation rules.

The IRS life-expectancy table used to derive distribution factors for SEPP calculations. The updated Single Life Table (Treas. Reg. §1.401(a)(9)-9(b), effective 2022) applies under Notice 2022-6; a SEPP series commencing before 2023 that elects Rev. Rul. 2002-62 uses the prior Single Life Table.

The standard required of SEPP distributions: payments must be "substantially equal" across the schedule period. Deviating from the computed amount without a permitted adjustment is what the IRS treats as a modification.