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jiminey
New Member

Is a Roth IRA distribution considered early if it is taken by a person who is disabled and unable to work-- receiving SS disability?

 
2 Replies
dmertz
Level 15

Is a Roth IRA distribution considered early if it is taken by a person who is disabled and unable to work-- receiving SS disability?

It is generally an early distribution, but the taxable portion that would otherwise be subject to a 10% early-distribution penalty may qualify for a penalty exception if the disability meets the IRS requirements for being considered disabled, which are different than the requirements for Social Security disability.  Also, if it has been more than 5 years since the beginning of the year for which you first made a Roth IRA contribution, meeting the IRS definition of disabled will make your Roth IRAs qualified and any amount taken from your Roth IRAs will be tax and penalty free.  However, most Roth IRA custodians will not get involved in determining whether or not you are considered disabled and will report the distribution as an early distribution rather than as a qualified distribution, requiring you to claim the disability qualification yourself.    If the custodian reports it as an early distribution rather than as a qualified distribution, I believe that claiming the early distribution as being a qualified distribution can only be done in forms mode of the CD/download version of TurboTax.  You'll also need to provide the IRS with an explanation statement and a doctor's statement indicating that it's a qualified distribution due to disability.

 

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-disability

 

Note that only the taxable portion of a Roth IRA distribution is potentially subject to an early-distribution penalty.  Under the ordering rules for distributions from a Roth IRA, original contributions come out of your Roth IRAs first, tax and penalty free, followed by conversions and finally earnings.

jiminey
New Member

Is a Roth IRA distribution considered early if it is taken by a person who is disabled and unable to work-- receiving SS disability?

Hi,

That answered my question,Thanks. I'll fill out the right form and I should be OK with the IRS.

Jim

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