Disability Exception to Penalty

L1: Disability Exception to PenaltyI have a client who has taken a retirement package. He has applied for social security disability. That process could take months. A doctor has stated that he will sign whatever papers are necessary to sayingthat he is not capable of working full time due to health issues. He wants to be able to take distributions from his IRA (age 56) under the disability exception, but also wants to know if there is a limitation on how much he can earn – if anything while doing that. He believes he can do some part-time desk work to supplement.From what I understand, social security allows you to earn a limited income (like $12,000 per year) while claiming benefits.2009-01-14 18:18, By: Kim, IP: [24.172.244.211]
L2: Disability Exception to PenaltyIt’s really a matter of getting the IRA Trustee/Custodian to agree to the disability. However, if your client is planning on working part time, he may not meet the SS definition of disability – your should be able to find it on the webor at SSA.Gov – you should alo be able to find teh earnings limitation at the SSA site.Here is what we have posted inour FAQ…Q. What is the Definition of Disability for 72(t)?? A. The definition of disability can be found in IRC Section 72(m)(7). In one case,Dwyer v. Comm., 106 TC No. 18 (1996), the Tax Court agreed with the IRS and stated… For purposes of this rule, an individual is considered disabled if “he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and infinite duration.” The Code specifies that an individual must be able to furnish proof of his disability in whatever form and manner that the Service may require. The court noted that the regulations under Section 72 also state that an impairment that is remediable does not constitute a disability.2009-01-14 23:17, By: Gfw, IP: [216.80.125.206]