Early withdrawal from IRA for person with disability

Submitted by Philip Detlefs on Thu, 2014-10-30 13:47

I have a client who has stage 4 cancer and the doctor has informed him that he would qualify under the American with disabilities act. Can you withdrawal money from your IRA under this provision without a 10% penalty?



Submitted by Alan - IRA critic on Thu, 2014-10-30 20:03

Section 72(m)(7) defines disability for penalty exception purposes. Client should get a letter from the MD stating that the disability meets this definition. Client should forward the letter (retain several copies) to his IRA Custodian requesting that the 1099R be coded 3 to reflect this exception. If the 1099R is not coded as such, then client should claim the exception using Form 5329.  The ADA may have slightly different requirements, so the letter should refer to this exception:

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.



Submitted by Andrea Gherini on Fri, 2017-06-30 01:03

I have a client who is 53 and has an IRA account rolled over from a former employer. His wife is 51 and totally disabled. She receives Medi-Cal and he is her full time caregiver.  He receives expanded Medi-Cal based on their low income. In order for his pension not to count as a resource for his Medi-Cal, his must withdraw principal and interest. Does the penalty free exception apply to withdrawal for disabled spouses?Thank you for your assistance. Andrea Gherini



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