You can start a 72(t) distribution at any age, as long as the funds come from an IRA or an employer plan you’ve already separated from. There is no minimum age requirement, meaning a 72(t) plan is available to someone in their 20s, 30s, 40s, 50s, or any age before 59½. The purpose of Rule 72(t) is to allow penalty-free early withdrawals as long as you follow the IRS rules for Substantially Equal Periodic Payments (SEPPs).
This makes 72(t) an important strategy for early retirees, business owners with fluctuating income, and individuals who want long-term access to retirement funds before traditional retirement age.
Why Is There No Minimum Age for 72(t)?
The IRS designed Rule 72(t) as an exception to the 10% early-withdrawal penalty. Instead of restricting it to a specific age, the IRS requires that you commit to a fixed stream of withdrawals. In other words, the commitment period replaces the age requirement.
So rather than waiting until age 59½ to avoid the penalty, the IRS lets you bypass it—at any age—if you agree to take mandatory annual withdrawals for:
- 5 years, or
- Until age 59½, whichever is longer
This rule ensures taxpayers don’t abuse the provision by taking one-time or irregular early withdrawals.
Common Ages When People Start 72(t) Distributions
Although technically you can start at any age, most people begin 72(t) withdrawals at:
- Age 45–55: Often early retirees, corporate executives, or small-business owners who sold a business
- Age 50–59: Workers leaving high-stress or high-burnout careers
- Mid-40s: FIRE (Financial Independence, Retire Early) individuals who want to bridge the gap until traditional retirement income starts
Starting at a younger age means a longer commitment period, so the decision requires careful planning.
What to Consider Before Starting 72(t) at a Young Age
Setting up a 72(t) early can create decades of mandatory withdrawals. Before beginning, consider:
- Long-term cash flow needs
- Impact on investment growth
- Whether you expect to return to work
- Your retirement balance size
- Potential tax consequences
Because a 72(t) cannot easily be modified or stopped, most taxpayers work with a CPA to calculate the correct SEPP amount.
Need Help Deciding When to Start 72(t)?
Starting too early or calculating incorrectly can lead to IRS penalties. Contact Dimov Tax for expert guidance on planning, calculating, and maintaining a compliant 72(t) distribution.