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Tips on how to retire early
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September 11, 2000: 11:03 a.m. ET
You can take "Substantial Equal Periodic Payments" from your IRA
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NEW YORK (CNNfn) - Are you lucky enough to have retired early? Congratulations. But now you want to enjoy some of your savings without getting hit with unnecessary penalties and taxes.
If you take something called Substantially Equal Periodic Payments, or SEPP, out of your IRA, what can you expect?
In response to a reader's question, Elissa Buie, a certified financial planner from Falls Church, Va., and a member of the Financial Planning Association, explained the way the withdrawals work.
Ask the experts a question
I retired at age 56 last November. I'm taking Substantially Equal Periodic Payments (SEPP) out of my IRA, into which I rolled my 401(k) funds after retirement, equal to 9 percent of the total per year. I assume all of this is correct so far. But now I'm confused. I assumed that I had to do this for a minimum of five years, taking me to age 61, before I could take out of the IRA whatever I wanted. Now it seems that I can forget the SEPP restrictions at age 59-1/2, which would amount to only 3 years, 6 months. Which of these rules is correct?
The rule to which you are referring requires that you take those "SEPP" out over five years or until you turn age 59 1/2 -- whichever is longer. So you will need to continue taking the payments for the full five years, even though this stretches beyond when you turn age 59 1/2.
By the way, did you know that if you had segregated that IRA into more than one account, you could have taken those payments out based on the balance in any one of the IRA accounts without having to include the values of the other(s)? That may not have been of interest in your particular situation, but it's an interesting planning tool nonetheless.
Hope you're enjoying that early retirement. 
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