Is a Roth IRA early distribution not taxable if I am 58 years old, permanently disabled and I have had the Roth IRA since 2003?

[sanders444]

Is a Roth IRA early distribution not taxable at all if I am 58 years old, permanently disabled and I have had the Roth IRA since 2003?

 If so, what do I need to prove that I am disabled and the amount I am taking for a distribution – $30,000 is part of
contributions and not earnings? I want to take this withdrawal for year 2019 and I am concerned about the taxes

[dmertz · Accepted solution]

If you are withdrawing no more than your basis in Roth IRA contributions, the distribution is not subject to tax or penalty regardless of your disability status.  You can simply report the early distribution and calculate the ($0) taxable amount on Form 8606.

If you are disabled and at the time of the distribution it has been 5 years or more since the beginning of the year for which you first made a Roth IRA distribution, the distribution is a qualified distribution, tax and penalty free no matter how much basis you have in your Roth IRAs, but you'll need to provide explanation and supporting documentation to make the earnings distributed be tax and penalty free.

Regarding disability, IRS Pub 590-B states:

You are considered disabled if you can furnish proof that you can't do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration.

TurboTax does not directly support treating a distribution as a qualified distribution due to disability and having a Roth IRA for 5 years or more.  If the code J Form 1099-R shows no tax withholding in box 4, as a workaround you can select code Q on TurboTax's 1099-R form instead of code J.  You'll need to mail your tax return with your explanation and supporting documentation.