To qualify for the hardship exemption (no 10% penalty) for a 401 (k) distribution, you must meet the IRS definition total and permanent disability:
A person is permanently and totally disabled if both of the following apply. He or she can't engage in any substantial gainful activity because of a physical or mental condition. A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death.
If you do qualify based on the above, although you would avoid the 10% penalty, your income would be taxed at your ordinary income rate. The income is not a deduction.
However you may be able to deduct your medical expenses due to your disability.
See What are the exceptions to the penalty for an early withdrawal from my 401(k)?
To qualify for the hardship exemption (no 10% penalty) for a 401 (k) distribution, you must meet the IRS definition total and permanent disability:
A person is permanently and totally disabled if both of the following apply. He or she can't engage in any substantial gainful activity because of a physical or mental condition. A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death.
If you do qualify based on the above, although you would avoid the 10% penalty, your income would be taxed at your ordinary income rate. The income is not a deduction.
However you may be able to deduct your medical expenses due to your disability.
See What are the exceptions to the penalty for an early withdrawal from my 401(k)?