A method of avoiding penalties
on early withdrawals
from an IRA. Ordinarily, an individual who withdraws funds
from an IRA before age 59.5 pays
a 10% penalty on the withdrawal. However, an individual can avoid
this penalty by taking substantially equal periodic payments
calculated by using a formula developed by the IRS. Individuals who choose to take
these payments must continue to do so for five years or until they reach age 59.5, whichever is longer.