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Early Retirement SEPP Planner

Type in the gold cells. Everything else fills in automatically. Enter the take-home income you want and this shows the SEPP account you need, the lock-in, and what happens if the dividend is cut.

1. Your numbers
Yearly income I want to take home (after tax)What you want to actually receive each year after income tax. Example value, enter your own.
Estimated tax rate on SEPP withdrawals (%)Your combined federal + state effective rate. SEPP payments are taxed as ordinary income. Depends on filing status and other income, so ask your CPA.
Dividend rate the account will earn (%)Yearly dividends as a % of the account. 12% is STRC's current stated rate. Variable and not guaranteed, see the Stress Test tab.
Age when I start taking paymentsYour age in the first year of payments (30 to 59).
Optional: dividend rate falls by this much each year (%)Variable rates can drift down over time. Set to 0 to hold the rate flat every year.
Optional: …but never below (%)The dividend rate stops falling at this level.
Year by year (first 30 years) · gold rows = payments are locked in

Inputs
Age at retirement / SEPP start ageSet on the Start Here tab.
SEPP account balance at startCalculated from your take-home need, tax rate and the payment formula below.
SEPP methodRMD (varies yearly, smallest payment), Fixed Amortization (fixed, most common), or Fixed Annuitization (fixed; needs the factor below).
Life expectancy tableSingle Life gives the largest payment. Uniform Lifetime gives a smaller, more conservative payment.
Interest rate for fixed methods (%)IRS Notice 2022-6 caps this at the greater of 5% or 120% of the federal mid-term AFR (next row).
120% of federal mid-term AFR, optional (%)Look up the current IRS Revenue Ruling AFR table for the month (either of the 2 prior months). Leave 0 to use the 5% floor. For Oct 2026 this is 5.54% (Rev. Rul. 2026-19).
Fixed Annuitization factor, optionalOnly for Fixed Annuitization: annuity factor from IRS Rev. Rul. 2002-62 Table B at your age and interest rate. Leave blank otherwise.
Projection end age (for summary)Summary balance is shown at the start of this age (allowed 60 to 100).
Dividend yield scenarios · edit the yields and price growth to model your portfolio

Assumes each yield is earned on the SEPP account with the stated price growth, and all dividends stay in the account. Higher-yield stocks often have lower price growth, so adjust growth per scenario. Coverage below 100% means shares must be sold to fund the payment. Payments are taken at the start of each year. Scenario 6 follows the Start Here tab, including its falling-rate option.

Dividend-cut stress test · built for STRC-style variable-rate preferreds

Uses the balance, start age, method and life table from Start Here and Calculator. The payment stays fixed even if the dividend is cut.

Dividend rate before the cutLinked to the dividend rate on Start Here (change it there).
Year the cut takes effect (1 = first payment year)Cut applies from this year onward.
Dividend rate after the cut (%)Try 8%, 6%, 4%. The break-even rate below is the level at which dividends just cover the SEPP payment.
One-time share-price change in the cut year (%)A cut can pressure the share price. Negative = price drop, applied to the remaining balance that year. Set 0 to ignore.
Ongoing price growth, all years (%)STRC is designed to trade near $100 par, so 0% is a neutral default.
What if the rate is cut to…? · same cut year and price change as above

Rate minus break-even below zero means dividends no longer cover the payment, so shares must be sold, possibly below par. Payments are fixed during the SEPP lock-in, so a cut cannot be offset by lowering the payment (one-time switch to RMD excepted).

Year-by-year projection
ScenarioGold rows = SEPP lock-in. After lock-in you may change or stop payments; this table keeps the same payment method going for comparison.

How to use

  • Enter your start age, take-home income, tax rate and dividend rate on Start Here. Method and life-expectancy table are on Calculator.
  • Edit the five dividend-yield scenarios (yield and price growth) on Calculator. Compare balances, dividend coverage and when, or if, the account runs out.
  • Check "SEPP rules check" for the lock-in length and interest-rate limit.

SEPP rules this planner reflects (IRC 72(t)(2)(A)(iv), IRS Notice 2022-6)

  • Payments avoid the 10% early-withdrawal penalty if they continue, unchanged, for the later of 5 years or until you reach age 59½.
  • Three methods: RMD (balance ÷ life expectancy, recalculated yearly), Fixed Amortization (level payment over life expectancy at the chosen rate), Fixed Annuitization (balance ÷ IRS annuity factor).
  • Fixed methods may use an interest rate up to the greater of 5% or 120% of the federal mid-term AFR. The RMD method uses no interest rate.
  • Allowed tables: Single Life, Uniform Lifetime, or Joint & Last Survivor (Joint not modeled here). Single Life gives the largest payment.
  • A one-time switch from a fixed method to the RMD method is allowed. Any other change, extra withdrawal, or contribution to the SEPP account before lock-in ends triggers the 10% penalty retroactively on all prior payments plus interest. Use a dedicated IRA for the SEPP so the rest of your savings stay flexible.

Simplifications (why real numbers will differ)

  • Annual time steps; the payment is taken at the start of the year and dividends/growth apply to the remaining balance. Real plans pay monthly or quarterly.
  • Age input = age attained in the first distribution year; life expectancy is looked up by whole-year age. Confirm exact dating with your CPA.
  • The RMD method uses the beginning-of-year balance as the prior year-end balance. Fixed methods use the starting balance computed from your take-home need.
  • Fixed Annuitization needs the IRS Rev. Rul. 2002-62 Table B factor (mortality + interest), which is not reproduced here; enter it in the optional cell.
  • Dividends are assumed constant as a % of balance and fully retained in the account (reinvested or held as cash). No market drawdowns and no inflation, except in the Stress Test.
  • Fixed SEPP payments do not rise with inflation. After lock-in you can change the payment freely.
  • Tax rate is a single flat estimate on SEPP withdrawals; dividends inside an IRA are not taxed until withdrawn and lose qualified-dividend treatment.

Dividend-cut stress test (STRC-style)

  • The Stress Test tab keeps your SEPP payment fixed and lowers the dividend rate from a chosen year, with an optional one-time share-price change.
  • Break-even rate = payment ÷ starting balance: below it, dividends no longer cover the payment and shares must be sold.
  • STRC facts (SEC filings, Sept 2026): variable rate reset periodically, 12.00% on $100 par, not guaranteed, not collateralized by Strategy's bitcoin, junior to creditors.
  • Inside a Traditional IRA, STRC's return-of-capital tax treatment does not apply; SEPP withdrawals are taxed as ordinary income. Ask your CPA where to hold it.

Start Here tab

  • Pre-tax payment = take-home ÷ (1 − tax rate). The account size comes from the IRS fixed-amortization payment formula (pre-tax payment ÷ payment per $1 of balance), not from the dividend rate.
  • Daily figures = yearly ÷ 365. STRC has proposed daily dividends (pending a shareholder vote); SEPP payments are typically monthly.
  • The optional falling-rate inputs are example values; set the drop to 0% to hold the dividend rate flat.

Sources

  • 26 CFR 1.401(a)(9)-9 (Single Life, Uniform Lifetime, Joint & Last Survivor tables)
  • IRS Notice 2022-6 (SEPP guidance, rate cap, table options); IRC Section 72(t).
  • Payment sanity check: $1,000,000 at age 50, Single Life factor 36.2, 5% fixed amortization gives about $60,300 a year; the RMD method gives about $27,600.

Life tables: Single Life per 26 CFR 1.401(a)(9)-9(b) (2022+). Uniform Lifetime ages 72+ per 1.401(a)(9)-9(c); ages 30 to 71 use the joint life expectancy of the taxpayer and a hypothetical beneficiary 10 years younger. Ages above 120 use the 120 row.