Hardship exclusion for early distribution on TIRA?
Having read Pub590 I don’t see any exclusion for the early distribution from an owner’s TIRA for the prevention of foreclosure.
That stated, client withdrew $25,000 in 2009 and $25,000 in 2010, from a traditional IRA, prior to age 59.5 to prevent foreclosure. Ultimately the home was sold in a ‘short sale’.
Just making sure that I haven’t missed any changes or PLR’s. Is there any exception to early withdrawal penalty for prevention of foreclosure, and if so, what are the requirements to qualify?
Thank you.
Permalink Submitted by Alan Spross on Tue, 2011-10-11 22:53
You are correct, there is no such exclusion for preventing foreclosure, bankruptcy, etc.
And hardship distributions from employer plans only allow for in service distributions, they do not avoid the income tax or the penalty on such distributions.