What is Rule 72(t) and how does it let me draw from my IRA early without penalty?

Rule 72(t) lets you take substantially equal periodic payments, or SEPP, from an IRA before 59 and a half without the 10% early-withdrawal penalty. You commit to a schedule of fixed annual withdrawals calculated using one of three IRS-approved methods based on your account balance and life expectancy. The catch: you must continue the payments for at least five years or until you reach 59 and a half, whichever is longer, and you can't change the amount or you'll owe retroactive penalties plus interest. This inflexibility makes SEPP a serious commitment, best for early retirees with a stable plan. You still owe income tax on Traditional IRA withdrawals. See the calculation methods at irs.gov.