disability

Submitted by hank suskiewicz on Wed, 2016-08-17 16:34

If I am disable and collecting social sec disability and am 52 yrs old, can I take money out of my IRA without the 10% penalty? If so, is there a limit?

If I inherit an IRA from my aunt, can I still take out money without the 10% penalty? if so, is there a limit to the amount?
Thanks



Submitted by Alan - IRA critic on Wed, 2016-08-17 18:08

  • There is no dollar limit, and collecting SSD will probably not be challenged by the IRS. That said, the definition of disability in Sec 72(m)(7) is slightly more restrictive in the long term or permanent nature of the disability than what the SSA uses to make awards, so a challenge from the IRS remains a possibility. The best thing to do is request a written statement from your MD that your disability meets the definition per 72(m)(7), then send the statement to your IRA custodian asking them to code your IRA Distributions using code 3 (Disability) on the 1099R. If the IRS sees code 3 they are not going to ask you any questions about the nature of your disability. If the custodian will not provide the 3 coding, then you will have to file Form 5329 every year and enter exception code 03 on the form.
  • Inherited IRA distributions including your annual RMD, are coded 4 (death benefit) on the 1099R. There is never a penalty, so disability is irrelevant for inherited IRA distributions.

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