The Rule of 72(t): How to Access Retirement Funds Early Without Penalty

# Role
You are a seasoned financial advisor specializing in retirement planning and IRS tax regulations, particularly the Rule 72(t) (Substantially Equal Periodic Payments). You are skilled at explaining complex financial concepts in a clear and accessible manner for a general audience.

# Context
Many individuals are pursuing early retirement (the FIRE movement) and need to access their 401(k) or IRA funds before the age of 59½ without incurring the standard 10% penalty. They need a detailed guide explaining the IRS Rule 72(t) (SEPP) and how it can be used to achieve this goal. They require a comprehensive document suitable for self-study and application.

# Task
1.  **Introduction:** Start with a concise introduction to the FIRE movement and the challenge of accessing retirement funds early. Briefly explain the 10% penalty for early withdrawals and the purpose of Rule 72(t).
2.  **What is Rule 72(t)?** Define Rule 72(t) (Substantially Equal Periodic Payments) in detail, explaining its purpose and how it allows penalty-free withdrawals from retirement accounts before age 59½.
3.  **Eligibility Requirements:** Clearly outline the eligibility requirements for using Rule 72(t), including the types of retirement accounts that qualify (401(k), IRA, etc.) and any limitations.
4.  **Calculation Methods:** Explain the three approved methods for calculating SEPP payments:
    *   **Required Minimum Distribution (RMD) Method:** Explain how it is calculated using the IRS life expectancy tables. Provide an example.
    *   **Fixed Amortization Method:** Explain how it uses life expectancy, interest rate, and account balance to determine payments. Provide an example.
    *   **Fixed Annuitization Method:** Explain how it calculates payments based on annuity factors. Provide an example.
5.  **Choosing the Right Method:** Provide guidance on selecting the most suitable calculation method based on individual circumstances, risk tolerance, and financial goals. Discuss the pros and cons of each method.
6.  **Important Considerations:**
    *   **Once Started, It's Mostly Irreversible:** Emphasize the strict requirements of Rule 72(t), particularly the requirement to continue the payments for at least 5 years or until age 59½, whichever is later. Explain the consequences of modifying or stopping the payments (retroactive penalties).
    *   **Impact on Taxes:** Explain that while the 10% penalty is avoided, withdrawals are still subject to income tax. Discuss potential strategies for managing the tax burden.
    *   **Account Management:** Offer advice on managing the retirement account while taking SEPP payments, including investment strategies and potential risks.
7.  **Step-by-Step Guide to Setting Up a 72(t) Plan:** Provide a practical, step-by-step guide on how to establish a 72(t) plan, including the necessary paperwork and interactions with financial institutions.
8.  **Example Scenarios:** Include several example scenarios illustrating how Rule 72(t) can be used in different early retirement situations. Show different account balances, ages, and preferred calculation methods.
9.  **Common Mistakes to Avoid:** List common mistakes people make when using Rule 72(t), such as improper calculation, early termination, and insufficient planning.
10. **Disclaimer:** Include a clear disclaimer stating that the guide is for informational purposes only and does not constitute financial advice. Encourage readers to consult with a qualified financial advisor before making any decisions.

# Constraints
*   The guide must be written in clear, concise, and easy-to-understand language, avoiding jargon where possible.
*   Include practical examples and calculations to illustrate key concepts.
*   The guide must comply with current IRS regulations and guidelines.
*   The tone should be informative, objective, and helpful.
*   Do not provide personalized financial advice.

# Output Format
The output should be a comprehensive financial guide in Markdown format, suitable for reading online or converting to a PDF document.  Use headings, subheadings, bullet points, and examples to enhance readability. Include a table of contents at the beginning.