topic I took early withdrawal for daughters rehab, is this considered medical bills? in Retirement tax questions

I took early withdrawal for daughters rehab, is this considered medical bills?

rawigg — Thu, 26 Sep 2019 21:47:03 GMT

Re: I took early withdrawal for daughters rehab, is this considered medical bills?

Kat — Thu, 26 Sep 2019 22:34:20 GMT

Are you referring to an early withdrawal from an IRA? If so, your daughter's rehab expenses may qualify as an exemption from the early withdrawal penalty. Your daughter must be a dependent of yours, and the amount of the withdrawal should be only in the amount needed to meet this immediate financial need. To be sure, I'd recommend speaking with your human resources specialist.

I'm linking you to an IRS webpage that will explain in more detail.

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

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Re: I took early withdrawal for daughters rehab, is this considered medical bills?

rjs — Fri, 27 Sep 2019 03:22:04 GMT

Are you asking whether the rehab expenses qualify for the medical expenses exception to the 10% penalty for early withdrawal from a 401(k) or traditional IRA?

You didn't say what kind of "rehab" your daughter had. Inpatient treatment for drug addiction is a medical expense. So is physical therapy that is given as a medical treatment.

Note that the amount that can be excluded from the penalty is only the amount by which your total medical expenses for the year exceed 7.5% (for 2018) or 10% (for 2019) of your Adjusted Gross Income (AGI). The rehab expenses are not treated separately. They are part of your total medical expenses.