Disability and 401k

[Rolandatroy]

My husband lost his job in feb 2018…we withdrew his 401k and had intentions of paying off a few bill and thrn rolling the rest over to an ira however, in April 2018 he had an accident and became permenany and totally disabled.  We did not roll the money over because we needed it to pay off bills.  When we filed taxes in 2019 I did not check that he was disabled because we took the money out before he became disabled. But we were able to roll it over because he became disabled.  Woukd he still have been eligible to not have to pay thr 10% penalty?  Thank you. 

[RobertB4444]

If the money was used to pay bills related to his disability and medical bills incurred because of that fact then yes, the 10% penalty would be waived.  If you paid that last year and he was disabled last year it may well be worth filing an amended return for 2020.

Just be aware that an amended paper filed return is going to take a minimum of six months to process at this point.  

[Rolandatroy]

No, the money wasn’t used to pay medical bills just bills we couldn’t pay because we was now disabled unable to work again.  

if I do an amended return the irs will either accept it or deny it if it’s wrong? 

[RobertB4444]

Yes, if you file an amended return the IRS will review it and deny it if it is wrong.  But when you go to amend it through TurboTax if the amount you're to receive back doesn't change based on your answers to the questions then you shouldn't bother to file it at all.