I have a client 44 yrs old who just received a settlement of 500k for a disability. He wants lifetime income and to keep from blowing his newly received money. If we put him in an annuity or series of annuities, and he is disabled, I understand he may avoid the 10% IRS penalty for early w/drawal. If he is later deemed fit for some occupation, can the 10% penalty be imposed at some later date. 15 years is a long time to remain disabled and he may at some point receive training for a new occupation. An insurance company rep told me today that the “new” income riders would qualify for the exception to the 59 1/2 penalty rule under 72t and/or 72Q. I have read the IRS publications and am having trouble substantiating this myself. Of course, with this line of thinking, I am ignoring the possiblity of the client qualifying for the exeption under the disability criteria. My concern is that he may someday no longer be disabled and have a penalty problem. In that he wants income for life, what is the best way to approach this using annuities while avoiding the 10% penalty for early withdrawal prior to age 59 1/2? Using the income rider seemed like a good idea, but I am having trouble determining if that would actually satisfy the 72t rules given the life expectancy table that the IRS uses for this determination.