Level or annuitized distributions prior to age 59 1/2
If as a 56 year old, I had a qualified $15k disability distribution (code 2 in box 7 of my 1099) from my traditional IRA AND in the same year I took a non-qualified early distribution of $30k, can I now take level distributions from my IRA and not be responsible for the 10% early distribution penalty? FOLLOW-UP If yes, would I take a level $30k OR do I have to take the greater $45k because of the qualified disability distribution?
Permalink Submitted by Alan - IRA critic on Wed, 2015-12-02 19:12
Disability is code 3, not 2. Usually, such disabilities are either permanent of of long duration. Was your disability successfully resolved so that the exception could no longer apply to later distributions? If so, you could start a 72t plan, but not retroactively. You would have to calculate the distribution using one of the 3 approved methods for 72t payments, and the penalty exception would apply only to distributions taken after you did the calculation. This exception would not apply to distributions taken before you started the plan. If you first have a 72t plan, a disability meeting the definition in Sec 72(m)(7) would end your plan and you could take unrestricted distributions thereafter. But if the disability comes first and then ends, you could start a 72t plan from that point forward.