can I request an exception on withdrawal of money from IRA due to an emergency move safety from domestic abuse for me and my children

[Opus 17 · Accepted solution]

You can claim an exception on the 10% penalty for up to $10,000 per year (or half the IRA balance, whichever is less) if you are a victim of DV due to a spouse or partner.  Unfortunately the law only counts if you are a victim of DV by a spouse or partner, the law does not discuss other abusers.   The law also does not specifically address abuse to children, but it does say that if the DV is aimed at your children as a means of controlling or intimidating you, the exception is allowed. 

To claim the exception, enter your 1099-R, Turbotax will say something like "you owe some penalties on this, lets check for exceptions that might lower your tax" and there will be a box to check for DV. 

[TomK2023 · Accepted solution]

Yes, you can withdraw funds from your IRA (or other qualified retirement plans) without paying the 10% early withdrawal penalty for victims of domestic abuse.

To be eligible, you must self-certify that you have been a victim of domestic abuse by a spouse or domestic partner within the past one year.  You do not need to provide police reports or court documents to the IRS with your return

You can withdraw the lesser of $10,000 (this amount may be adjusted for inflation in future years) or 50% of your account balance.

While the 10% penalty is waived, the distribution is still considered taxable income.  However, you have the option to "repay" the money back into your IRA within 3 years to get a refund on the income taxes paid.

Form 5329 (Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts) is used to   claim the exception; (Code 22 is the exception code for domestic abuse victims).

1. Open or continue your return.
2. Under Federal tab, Click on Wages & Income.
3. Scroll down to Retirement Plans and Social Security, and Click on Start/Revisit next to 1099-R, IRAs, 401k, early withdrawal.
   Enter the 1099-R details exactly as they appear on the form.
4. Proceed through the interview screens... When the program asks, "Did you use this money for anything else?" or "Do you qualify for an exception?", Look for the option labeled "Victim of domestic abuse" or "Qualified domestic abuse distribution.", and Check this box (Form 5329 will automatically be generated and remove the 10% penalty from your tax calculation).

Important Note: If you need more than the $10,000 domestic abuse limit, there is another separate exception for "Emergency Personal Expenses."  This allows for an additional withdrawal of up to $1,000 once per year for "unforeseeable or immediate financial needs."  This domestic abuse exception is also penalty-free but subject to regular income tax.

If you are currently in an emergency situation and need immediate help with relocation or legal resources, you can contact the National Domestic Violence Hotline at 800-799-7233 or text "START" to 88788.