Fixed Annuitization Method

If you have a retirement account, you know the rules: no touchy without penalty!

Except, well, there are a few exceptions...special side-door rules, you could say. The fixed annuitization method is one.

The fixed annuitization method is one of three ways you can get access to your retirement money penalty-free if you’re retiring early (as in, before you’re 59-and-a-half years old). The other two methods are called the fixed amortization method and the required minimum distribution method. All three methods are different calculations for early, penalty-free withdrawal for early retirees.

Out of the three methods, the fixed annuitization method of calculating early payout is the most complicated. But for some, it could yield the highest payouts. The fixed annuitization method means that the retirement account balance is divided by an annuity factor, which is based on official IRS mortality rates. The payout calculated is called the 72(t) distribution, which can’t be changed once it’s calculated (ergo, the “fixed” part).