Disability Distribution

You are here:
< Back

L1: Disability DistributionI started my distribution in 2003 and at 49 years old when I retired after 30 years. I have had some health issues and I am going blind in one eye. Can my distribution be changed or may I make any type of withdrawal because of my disbility? How do I file for this type of withdrawal. I am not totally disabled yet but my disability keeps me from working full time.2006-08-03 14:36, By: Pat, IP: [152.25.255.241]
L2: Disability DistributionHello Pat:
Unfortunately, to use the disability exception to the 10% surtax under IRC 72(t); your disability must be considered or classified as permanent & total. Temporary or partial disabilities generally do not qualify. However, disability is measured within the context of the taxpayer”s previous occupation. That said, if you did work in a profession which required bifocal vision (meaning both eyes working well, even if corrected) and monoccular vision was unacceptable; then, potentially you do have a total disability; and if this condition can not be corrected; then it would be considered permanent. Generally, the strandard applied is whenever a taxpayer applies to the Social Security Administration for disability benefits and is accepted.
TheBadger
wjstecker@wispertel.net
2006-08-03 16:34, By: TheBadger, IP: [66.109.211.254]

L2: Disability DistributionPlease see IRS Publication 590 – the IRS defines disability a bit different then the earlier responder. According to IRS regulations,there are a few basic items that must be addressed:
Beneficiary is unable to engage in any substantial gainful activity.
A physician must determine the status of the condition and certifies the disability in writing.
The disability can be expected to result in death or to be long-continued and indefinite duration.
So an example that once part of: Jane Doe was a nurse, she worked on her feet 10-12 hours a shift. She was involved in a car accident and serious injuries. She was not able to walk more then a few feet without being in pain. The IRS said that she was not disabled since she could do some sort of gainful employment. She now has a desk job and can work. So your situation could be tricky since almost every job you do need vision. The wording the IRS uses is “any substantial gainful activity” is the key here. I wish you luck. 2006-08-04 09:01, By: 72(t), IP: [167.80.244.204]

L2: Disability DistributionJust to indicate how confusing this issue is; I will diagree with the last poster. One should focus on IRC Reg. 1.72-17A(f) which says:
“In determining whether an individual’s impairment makes him unable to engage in any substantial gainful activity [emphasis added], primary consideration shall be given to the nature and severity of his impairment. Consideration shall also be given to other factors such as the individual’s education, training, and work experience. The substantial gainful activity to which section (m)(7) refers is the activity, or comparable activity, in which the individual customarily engaged prior to the arising of the disability…”
In short, this is best demonstrated by an example. Two brothers are involved in an accident and as a result, both brothers are permanently parapelgic. One brother is an NFL quarterback and the 2nd brother is a neuro-surgeon. The 1st brother is totally and permanently disabled; the 2nd brother is not as he can still perform surgery sitting down.
Now, I imagine that 95% of all professions can be performed with vision form one eye; however, some professions might absolutely require vision in both eyes; e.g. aircraft pilot, maybe certain professional athletic activities, or other “vision intensive” professions that I can not think of.
TheBadger
wjstecker@wispertel.net
2006-08-04 09:45, By: TheBadger, IP: [66.109.211.254]

L2: Disability DistributionFrom the cases I have seen, the general pattern is that if Social Security Administration declares someone “disabled,” the IRS accepts that. On the other hand, if SSA turns someone down, then the IRS follows suite. SSA seems to be the “clearing house” for disability claims within the government.
I don”t know if you have filed with SSA or not, but expect the first request to be denied. Then on subsequent request, and with good documentation … usually the same stuff you gave them the first time … and a “bulldog” of an attorney, SSA will approve your disability claim. Then you are cleared to deal with the IRS and all should work out OK. Unfortunately, this is the beaurocratic game the government plays with us.
Good luck.
Jim2006-08-04 10:04, By: Jim, IP: [70.184.1.35]

L2: Disability DistributionUntil and if you meet the disability definition, you might check into the one time switch to the RMD method. That usually results in a lower payment, but not always if your account has substantial gains. And you did not indicate the direction you want the payment to go. Since this can only be done one time, use this option with some caution.2006-08-04 22:29, By: Alan S., IP: [24.116.165.157]