IRA distributions to Supplemental Needs Trusts
Will a distribution from a traditional or Roth IRA to a self-settled supplemental needs trust (ORBA 93 trust) be hit with penalties if the individual is under age 59 and is applying for means-tested government benefits (SSI and Medicaid) due to their disability? Does the answer change if the disability has existed since birth and now the individual is applying for government benefits in his thirties?
Permalink Submitted by Alan Spross on Fri, 2009-08-28 21:28
The disability exception to the early withdrawal penalty should waive it for most SNT beneficiaries. There would be a problem if the special need comes up short of meeting the definition of disability for some reason.