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New Member
posted Feb 10, 2024 11:03:53 AM

I have filed for disability and have no income. I took money out of my IRA. Do i qualify for no penalty?

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2 Replies
Expert Alumni
Feb 13, 2024 9:19:45 AM

The IRS says, in the case of "total and permanent disability of the participant/IRA owner", then you can withdraw from either an IRA or a 401(k) without the early distribution penalty. See this IRS webpage.

 

If anyone ever asks (like in an audit or by letter), you need to be prepared to prove "total and permanent disability of the participant/IRA owner".

 

Also, note that the distribution code on your 1099-R may or may not cause the distribution to be subject to the 10% early distribution penalty. So when you are entering the 1099-R, watch the screens after you start this to find the opportunity to assert your exception.

Level 15
Feb 13, 2024 9:27:00 AM

The IRS makes it's own determination if you qualify for the disability exception to the early-distribution penalty based on documentation you provide to the IRS, should they ask for it.  Another entity's determination of disability does not guarantee that the circumstances qualify for the exception to the early-distribution penalty.