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However, early retirees can still access their funds by taking what is known as substantially equal periodic payments (SEPP) in an IRA, 401(k), 403(b) or other qualified retirement account without ...
Just like the name indicates, you can take a series of substantially equal periodic payments – or SEPP – from your retirement account without facing the 10% early withdrawal penalty.
Substantially equal periodic payments (SEPP) are one of the exceptions in the United States Internal Revenue Code that allows a retiree to receive payments before age 59 1 ⁄ 2 from a retirement plan or deferred annuity without the 10% early distribution penalty under certain circumstances.
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Finally, although one can take distributions from a Roth IRA under the substantially equal periodic payments (SEPP) rule without paying a 10% penalty, [25] any interest [vague] earned in the IRA will be subject to tax [26] – a substantial penalty which forfeits the primary tax benefits of the Roth IRA.
Substantially equal periodic payments are one option available to those who really need to tap their IRAs early. But be aware that can be a complicated process, and could be easy to make a costly ...
The five-year rule to get tax-free earnings out of a Roth IRA can be tricky. We explain. ... You agree to accept substantially equal periodic payments for five years or until you turn age 59 ½ ...
6. The time limit on periodic payments. Savers have a loophole to take an IRA distribution before age 59½ without a penalty – using a series of substantially equal periodic payments (SoSEPP ...
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