IRA Withdrawal Calculator

Q: What is the Roth IRA 5-year rule?

There are three 5-year rules: (1) The account rule — your Roth must be open for 5 tax years before earnings are tax-free (even after 59½). The clock starts January 1 of the year of your first contribution or conversion. (2) The conversion rule — each conversion has its own 5-year clock for penalty-free withdrawal before 59½. (3) The inherited Roth rule — beneficiaries use the original owner's timeline.

Q: What is 72(t)/SEPP and how does it work?

Substantially Equal Periodic Payments (SEPP) let you withdraw from your IRA before 59½ without the 10% penalty. Three IRS-approved methods: RMD (smallest), fixed amortization, or fixed annuitization. Payments must continue for at least 5 years or until age 59½, whichever is longer. The maximum interest rate is 5% or 120% of the federal mid-term rate (Notice 2022-6).

How much will you actually receive after taxes and penalties? Enter your withdrawal details — see federal tax, early penalty, state taxes, and penalty exceptions. Includes 72(t)/SEPP comparison and Roth ordering rules for 2026.

How much will you actually receive after taxes and penalties?

Account type

Withdrawal amount

Your age

Filing status

Other taxable income

W-2, self-employment, other (not this withdrawal)

State

Non-deductible basis (Form 8606)

After-tax contributions to Traditional IRA. $0 if all contributions were deductible.

Do any penalty exceptions apply?

First-time home purchase ($10,000 lifetime)

Higher education expenses

Medical expenses exceeding 7.5% of AGI

Total and permanent disability

Birth or adoption ($5,000 per event)

72(t) substantially equal periodic payments

Emergency personal expense ($1,000/year, SECURE 2.0)

Federally declared disaster ($22,000, SECURE 2.0)

—

Try another scenario

How to Use This Calculator

Tab "Withdrawal Tax & Penalty"

Select Traditional IRA or Roth IRA, enter your withdrawal amount, age, filing status, and other taxable income. The calculator computes federal income tax (incrementally stacked on your other income), the 10% early withdrawal penalty if you're under 59½, and state taxes for 5 key states. For Traditional IRAs with non-deductible contributions, enter your basis to apply the pro-rata rule (Form 8606). If you're under 59½, check any applicable penalty exceptions — the penalty recalculates instantly.

Tab "Early Withdrawal Strategies"

Compare four strategies side-by-side: (1) Traditional IRA withdrawal with full tax and penalty, (2) Roth contributions (always tax-free), (3) 72(t)/SEPP for penalty-free periodic payments, and (4) a Roth + Traditional combination. Enter your balances, contribution basis, and the amount you need. The calculator shows the total cost of each approach and recommends the cheapest option.

Tab "Roth Withdrawal Rules"

Check your Roth IRA ordering rules, 5-year rule status, and whether your withdrawal qualifies as tax-free. Enter your contribution total, conversion history, and the year you first opened a Roth. The calculator shows exactly how your withdrawal is sourced: contributions first (always tax-free), then conversions (FIFO, with 5-year penalty clock), then earnings (taxable unless qualified).

The Formulas

Traditional IRA Withdrawal Tax:
Tax = Federal Tax(Other Income + Withdrawal) − Federal Tax(Other Income)
This "incremental" approach stacks the withdrawal on top of your existing income.

Early Withdrawal Penalty (IRC §72(t)):
10% × taxable withdrawal amount (if under age 59½ and no exception applies)
15 exceptions exist: disability, first home ($10K), education, medical >7.5% AGI, SEPP/72(t), birth/adoption ($5K), emergency ($1K), disaster ($22K), and more.

Pro-Rata Rule (Form 8606):
Taxable % = 1 − (Non-Deductible Basis ÷ Total IRA Balance)
Must aggregate ALL Traditional, SEP, and SIMPLE IRAs.

Roth Ordering (IRC §408A(d)(4)):
1. Contributions → always tax-free, penalty-free
2. Conversions (FIFO) → tax-free, but 10% penalty if within 5 years AND under 59½
3. Earnings → tax-free only if qualified (59½+ AND account open 5+ years)

72(t)/SEPP Annual Payment (Notice 2022-6):
RMD method: Balance ÷ Life Expectancy (recalculated annually)
Fixed amortization: Balance × r ÷ (1 − (1+r)^−LE) where r = 5%
Duration: longer of 5 years or until age 59½

The 5% interest rate is the floor set by Notice 2022-6, effective for SEPP plans starting in 2023 or later. If 120% of the federal mid-term AFR exceeds 5%, that higher rate may be used instead. As of early 2026, the mid-term AFR is approximately 4.6%, so the 5% floor applies. The one-time switch from fixed amortization or annuitization to the RMD method is still permitted without triggering retroactive penalties.

Example

Maria — Age 52, Divorced, $40,000 Emergency Need

Traditional IRA: $320,000 (all pre-tax). Roth IRA: $45,000 ($30,000 contributions, $15,000 earnings, opened 2019). Filing: Single, $68,000 salary. State: California.

Amount needed$40,000

Strategy 1: Traditional withdrawal

Federal tax (22% marginal)$8,800

10% early penalty$4,000

CA state tax (9.3%)$3,720

CA early penalty (2.5%)$1,000

Total cost / Net received$17,520 / $22,480

Strategy 2: Roth contributions

Available (tax-free)$30,000

Shortfall$10,000

Strategy 4: Roth + Traditional combo

Roth contributions (tax-free)$30,000

Traditional $10K (tax + penalties)$4,380 cost

Net received$35,620

Winner: Roth + Traditional combo. Maria takes $30,000 from Roth contributions (tax-free) and $10,000 from Traditional. The combo costs $4,380 vs $17,520 for all-Traditional — saving $13,140. The 72(t)/SEPP option would provide ~$19,700/year penalty-free, but locks Maria in for 7.5 years, making it impractical for a one-time emergency need.

Frequently Asked Questions

What happens if I withdraw from my IRA before 59½?▼

For a Traditional IRA, the withdrawal is taxed as ordinary income plus a 10% early withdrawal penalty. For a Roth IRA, contributions can always be withdrawn tax-free and penalty-free. Only conversions (within 5 years) and earnings face penalties before 59½. There are 15 penalty exceptions including disability, first-time home purchase ($10,000), education expenses, and several new ones from SECURE 2.0 (emergency $1,000/year, disaster $22,000, domestic abuse, terminal illness).

What is the Roth IRA 5-year rule?▼

There are actually three 5-year rules: (1) The account rule — your Roth must be open for 5 tax years before earnings are tax-free (even after 59½). The clock starts January 1 of the year of your first Roth contribution or conversion. (2) The conversion rule — each conversion has its own 5-year clock for penalty-free withdrawal before 59½. After 59½, this rule is irrelevant. (3) The inherited Roth rule — beneficiaries use the original owner's timeline. All three rules are per IRC §408A(d).

What is 72(t)/SEPP and how does it work?▼

Substantially Equal Periodic Payments (SEPP) under IRC §72(t)(2)(A)(iv) let you withdraw from your IRA before 59½ without the 10% penalty. You must take payments at least annually using one of three IRS-approved methods: RMD (smallest, recalculated yearly), fixed amortization, or fixed annuitization (both fixed, larger amounts). The payments must continue for at least 5 years or until you turn 59½, whichever is longer. If you modify the schedule early, ALL past penalties are retroactively applied plus interest.

How does California's extra 2.5% penalty work?▼

California imposes a 2.5% state early withdrawal penalty on top of the federal 10%, for a combined 12.5% penalty. It's reported on FTB Form 3805P. California generally conforms to federal exceptions — if you qualify for a federal exception (including SEPP), you're exempt from the California penalty too. No other state has a comparable additional early withdrawal penalty.

Does my state tax IRA withdrawals?▼

Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Illinois and Mississippi fully exempt retirement income. Pennsylvania exempts IRA withdrawals after 59½. Iowa exempts retirement income for those 55+. New York offers a $20,000 exclusion for 59½+. States like California, Minnesota, and Oregon fully tax retirement income with no special exclusion.

Related Calculators

Embed This Calculator

Free to embed on your website. Copy the code below: