How the calculations work
A full technical reference for every SEPP Guard calculation — the three safe-harbor methods, the interest-rate ceiling, and how IRS life tables and attained age feed the math. The engine is deterministic and fail-closed: any result can be reproduced by hand from the formulas below.
Last technically reviewed: 2026-08-19. This page is re-reviewed when the governing IRS guidance, life tables, or rate-ceiling rules change. Review is conducted by the operator; no independent certification or professional attestation is claimed unless a specific reviewer and scope of review are expressly identified — see the About page.
1. Overview
SEPP Guard uses a deterministic, fail-closed calculation engine that reads values exclusively from verified IRS-published datasets. No figure is estimated, and no value is ever interpolated or invented: the engine refuses to compute rather than guess. The statutory authority for Substantially Equal Periodic Payments is IRC §72(t)(2)(A)(iv), which excepts a series of substantially equal periodic payments from the 10% additional tax on early distributions.
Every calculation resolves a fixed sequence of inputs in a mandatory order. Each step constrains the next, so a given set of facts always produces the same result:
The resolution sequence enforced by the SEPP Guard engine.
The series commencement date is the date of the first payment in the series. It fixes the governing ruleset, which in turn fixes the life table version, which in turn fixes the exact published factor the engine reads. Only after every input is resolved is the arithmetic performed.
2. Governing Ruleset & Life Table Version
The series commencement date selects one of two governing rulesets, and the ruleset selects the life table version. The engine never mixes tables across rulesets.
Rev. Rul. 2002-62 · Pre-2023
Series commencing before January 1, 2023 are governed by Revenue Ruling 2002-62. Life expectancy factors are read from the ruling's Appendix A single-life table (and the Uniform Lifetime / Joint & Last Survivor tables referenced therein).
Rev. Rul. 2002-62, Appendix A; Treas. Reg. §1.401(a)(9)-9 (pre-2022 tables).
Notice 2022-6 · 2023 and later
Series commencing on or after January 1, 2023 are governed by Notice 2022-6. Life expectancy factors are read from the revised tables of Treas. Reg. §1.401(a)(9)-9 (the updated Uniform Lifetime, Single Life, and Joint & Last Survivor tables effective for 2022).
Notice 2022-6; Treas. Reg. §1.401(a)(9)-9 (revised tables).
The 2022 election year
A series commencing in 2022 is an election year: it may be governed by either Revenue Ruling 2002-62 or Notice 2022-6, at the taxpayer's election. The election is made when the series begins and is irrevocable for the life of the plan. SEPP Guard treats 2022 as an election year — the engine will not compute a 2022-commencing plan until a ruleset election is selected, so the result is never ambiguous.
Notice 2022-6 (a series beginning in 2022 may elect either ruleset).
One-way RMD table transition
A pre-2023 RMD-method plan may make a one-time, irrevocable switch to the revised §1.401(a)(9)-9 life tables (the 2022 updated tables). The transition is one-way: once adopted, the plan never reverts to the prior Appendix A table. Fixed amortization and fixed annuitization plans lock the table version in force at the series commencement date for the life of the plan.
§7520 actuarial tables are prohibited
The §7520 actuarial tables (used for gift and estate valuation) are not permitted for SEPP annuitization. Only the life-expectancy tables specified by the governing ruleset may be used, and for fixed annuitization only the prescribed mortality table applies.
3. Attained Age Rule
Attained age is the age the taxpayer turns in the distribution year — the calendar year of the first distribution in the series — not the age on the exact distribution date. A taxpayer who turns 52 in November uses attained age 52 even if the first payment is taken in January of that same year.
Attained age, as applied by the engine for the distribution year.
For the Joint & Last Survivor table, the same rule applies independently to both the taxpayer and the beneficiary. The beneficiary's attained age is computed the same way (beneficiary_age = distribution_year − beneficiary_birth_year), and the joint factor is read at the pair of attained ages.
4. The Three Safe-Harbor Calculation Methods
Each method produces an annual payment from the same set of resolved inputs but differs in whether the amount is fixed or recalculated, and in how the life-expectancy input enters the math. For non-annual distribution frequencies, the periodic payment divides the annual payment evenly:
Periodic payment for non-annual frequencies (applies to all three methods).
Required Minimum Distribution (RMD) method
The annual payment equals the account balance divided by the life-expectancy factor for the taxpayer's attained age. The balance and the factor are recalculated each year, so the payment moves with the account and the taxpayer's age. This is the only method that recalculates.
IRC §72(t)(2)(A)(iv); Rev. Rul. 2002-62 §1; Notice 2022-6.
Inputs: account_balance (current year-end balance), life_expectancy_factor (from the applicable table at attained age).
Fixed amortization method
The annual payment is the level payment that amortizes the starting balance to zero over the taxpayer's life expectancy, at the chosen effective interest rate. The amount is fixed for the life of the plan — it does not change with the account balance or the taxpayer's age.
Rev. Rul. 2002-62 §2(b); Notice 2022-6. Standard amortization-of-an-annuity-immediate identity.
Inputs: balance (initial account balance), r = effective annual rate (after the rate ceiling, see §5), n = life_expectancy_factor from the applicable table at attained age.
Fixed annuitization method
The annual payment equals the account balance divided by an annuity factor derived from the prescribed mortality table. The amount is fixed for the life of the plan. The annuity factor uses the end-of-year (annuity-immediate) payment convention demonstrated in IRS Q&A-7 (see §6).
Rev. Rul. 2002-62 §2(c); Notice 2022-6; Treas. Reg. §1.401(a)(9)-9(e) (mortality rates); IRS FAQ Q&A-7 (annuity-immediate convention).
Inputs: balance (initial account balance), annuity_factor (derived from the prescribed mortality table at attained age and the effective rate — see §6).
Account balance and valuation date
All three methods take the account balance as an input, and the balance must be determined in a reasonable manner based on the facts and circumstances. Any daily account balance from December 31 of the year before distributions begin through the date of the first payment in the series would generally be treated as reasonable; the prior year-end (December 31) balance is the example cited in the guidance and is the engine's suggested default. The engine uses the balance and valuation date exactly as entered and records both in the immutable snapshot — it does not select or substitute a valuation date.
Notice 2022-6 §3.02(d); Rev. Rul. 2002-62 §2.02(d) — reasonable-manner balance determination.
Guardrail: no contributions, rollovers, transfers, withdrawals, or forfeitures should occur between the valuation date and the first distribution — a transaction in that window would generally undermine the reasonableness of the balance used. Under the fixed methods the valuation date is locked for the life of the plan; under the RMD method the balance is redetermined each year.
5. Interest Rate Ceiling (Notice 2022-6 & Rev. Rul. 2002-62)
The chosen interest rate is capped by a ceiling derived from the federal mid-term applicable federal rate (AFR). The two rulesets apply slightly different ceilings:
Notice 2022-6 ceiling
For 2023-and-later plans, the ceiling is the greater of 5% or 120% of the mid-term AFR. The effective rate is the lesser of the chosen rate and that ceiling.
Notice 2022-6.
Rev. Rul. 2002-62 ceiling
For pre-2023 plans, the ceiling is 120% of the mid-term AFR, with no 5% floor. The effective rate is the lesser of the chosen rate and that ceiling.
Rev. Rul. 2002-62 §2.
What “mid-term AFR” means
The mid-term AFR is the federal mid-term applicable federal rate published monthly by the IRS under IRC §1274(d) — the annualized rate for debt with a term of more than three years and not more than nine years. Only the mid-term rate published in one of the two (or, under Rev. Rul. 2002-62, the two or three) months immediately preceding the first distribution is eligible to set the ceiling. SEPP Guard surfaces four distinct concepts: the published AFR, 120% of that AFR, the maximum permitted rate, and the rate actually used in the calculation.
If the chosen rate exceeds the ceiling, the engine substitutes the ceiling rate as the effective rate and flags the substitution in the result — the chosen rate is never used in the arithmetic when it is above the permitted maximum.
6. Annuitization Factor Derivation
The fixed annuitization method depends on an annuity factor derived from the prescribed mortality table. SEPP Guard computes that factor directly from the table's mortality probabilities using the end-of-year (annuity-immediate) payment convention demonstrated in IRS Q&A-7 — payments are assumed to occur at the end of each year, so the first payment is discounted by a full year.
Actuarial identity
Annuity-immediate factor over the remaining lifetime; k_p_x derived from the qx column of the prescribed mortality table.
where k_p_x is the probability of surviving k more years from age x (derived from the qx values in the prescribed table as the product of the one-year survival probabilities), v = 1 ÷ (1 + r) is the annual discount factor at the effective rate r, and ω is the table's limiting age (the age at which survival probability reaches zero).
Survival probability
k_p_x is the cumulative product of one-year survival probabilities from the prescribed table.
IRS anchor — Q&A-7
The published IRS Q&A-7 example produces an annuity factor of 18.1568 for attained age 50 at a 4.00% rate. SEPP Guard reproduces this factor exactly from the prescribed mortality table — it is the canonical anchor that confirms the engine's payment-timing convention and mortality data are correct.
Differences from third-party calculators arise from payment-timing convention differences (annuity-immediate vs. annuity-due), not from data errors. A calculator that discounts the first payment by less than a full year will produce a slightly smaller factor and a slightly larger payment; SEPP Guard follows the IRS's own published example.
Educational tool for understanding IRC §72(t) — not tax, legal, accounting, or investment advice, and no guarantee of IRS compliance. Confirm all results with a qualified professional before acting. Full disclaimer