72t distributions

Submitted by Don Warnke on Thu, 2013-09-05 21:36

Client was layed of at age 52 and rolled over his 401k to an IRA, he started taking 72t distributions to help him along, now at age 56 he has since become disabled and is drawing social security disability, can he discontinue 72t distributions or take larger amount out without penalty since he is now disabled?



Submitted by Alan - IRA critic on Thu, 2013-09-05 23:36

  • Generally, yes. He must meet the definition of disability per Sec 72(m)(7) and I would recommend he get a letter from his MD that he meets the requirements of this section. 
  • 72(m)(7) MEANING OF DISABLED. –For purposes of this section, an individual shall be considered to be disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to be disabled unless he furnishes proof of the existence thereof in such form and manner as the Secretary may require.
  • He should also submit the letter to his IRA custodian and request that his 1099R be coded with a 3 in Box 7 as code 3 will head off any IRS questions.

Add new comment

Log in or register to post comments