10% Exception due to disability

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L1: 10% Exception due to disability
DOB 1960 – Obtained Social Security Disability this year. Looking to make premature distributions from IRA and set up a SEPP plan. What is needed for the IRS to allow the disability exception?
Thank you.
2018-12-17 20:35, By: CC, IP: []

L2: 10% Exception due to disability
See IRS Pub 590-B re DISTRIBUTIONS FROM IRAs, and IRC 72(t)(2)(A)(iii) concerning “TOTAL & PERMANENT DISABILITY”.
The IRS regulations and criteria are different from those of SSA.
2018-12-17 21:29, By: dlzallestaxes, IP: []

L3: 10% Exception due to disability
1) Ask your doctor for a written statement that you meet the disability requirements of Sec 72(m)(7). If this is provided sent it to your IRA custodian and ask them to code all distribution as disability distributions – Code 3.
2) In the meantime if you feel you meet the requirement, file Form 5329 and enter exception code 03 on line 2.
3) Qualifying for SSD means you usually will qualify, but not always. As DLz indicated, the requirements for SSD are not identical to those of Sec 72(m)(7). That is the reason for securing the statement from the MD. Once the 1099R forms show Code 3 you will not have to file a 5329 any longer.
4) More important, if you qualify for Code 3, there is no reason to start a SEPP since your distributions will be penalty free without a SEPP. And if you already started a SEPP, getting Code 3 will allow your SEPP to end without any consequences.
2018-12-18 02:28, By: Alan S, IP: []