A method of avoiding penalties on early withdrawals from an IRA. Ordinarily, an individual who withdraws funds from an IRA before age 59.5 pays a 10% penalty on the withdrawal. However, an individual can avoid this penalty by taking substantially equal periodic payments calculated by using a formula developed by the IRS. Individuals who choose to take these payments must continue to do so for five years or until they reach age 59.5, whichever is longer.
Related information about substantially equal periodic payment (SEPP):
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Nov 26, 2002 ... Taxpayers often make costly mistakes with SEPP programs because there is little guidance on what can be done in certain situations.
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Definition of substantially equal periodic payment (SEPP): A method of avoiding penalties on early withdrawals from an IRA. Ordinarily, an individual who ...
- Substantially equal periodic payments: Definition from Answers.com
Substantially Equal Periodic Payment - SEPP A plan that allows individuals who have invested in an IRA or another qualified retirement plan to withdraw.
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An overview of Substantially Equal Periodic Payments, or SEPPs, that includes the rules for withdrawals, how to calculate withdrawals and the benefits of SEPP.
- From The Tax Advisers
Of all the exceptions to avoid the early distribution penalty, the substantially equal periodic payment (SEPP) alternative is the most universally available. It does ...