Early IRA withdrawal due to disability

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Wife took an early distribution on her IRA due to her being disabled. Applied for disability over a year ago, was declined, and are now appealing. Her Doctors say she is disabled. May we claim the disability exemption without a determination letter from SSDI? Would a statement from her Doctors suffice? Or are we stuck with the penalty.

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Douglas219Answer

Level 2

The doctor's statement is the only documentation you need in this case and not the letter from SSDI to take the exemption from the IRS 10% penalty for early withdraw. As you know the amount you received from the distribution is still subject to ordinary income rules. The doctor's statement needs to be concise in it's wording. I would suggest, "that the physical or mental impairment is continuous and of long and indefinite duration". I hope that this helps you and I'm sorry for the disability illness in your family.

Douglas219Answer

Level 2

Detrease

Level 2

is th social security disability verification letter sufficient?

AmyC

Alumni - Intuit

Yes, a letter from Social Security would be sufficient evidence for the IRS to allow the disability claim.

@Detrease

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bosso3

Level 7

I am not a tax professional.

I refer you to IRS Publication 590-B https://www.irs.gov/pub/irs-pdf/p590b.pdf especially page 21, which describes the codes on your 1099-R, and page 24 which discusses exceptions to the 10% early withdrawal penalty, and page 25 which discusses disability.

Also https://www.irahelp.com/slottreport/5-things-know-about-disability-exception-10-early-ira-distributi... contains a good discussion about the definition of disability (very strict) and how to file and claim the disability exception even if your 1099-R does not report that exception.