medical expenses

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L1: medical expensesLast year (2003), I received a lump sum at the age of 54 when I left my job. This year I am 55 but have to do the 72T to avoid the 10% penalty. I plan to start taking payments in Jan 2005 in which I’ll be 56 in August. My question is in regard to medical expenses – I will need to contribute 50% on my medical coverage – is there any allowance for medical expenses through the 72T? I was under the impression this was true regarding education expense.My financial advisor said no.2004-11-30 09:01, By: Jeannie, IP: [68.163.254.105]
L2: medical expensesHello Jeannie:
Here is an excerpt from my book. It may fit your needs or it may not. As a caution, if you are going to use this except; do so in 2004 or from a separate IRA than the IRA from which you will commence a SEPP plan in 2005; e.g. I would not mix the two.
TheBadger
wjstecker@wispertel.net
#8 Medical Expenses. You may make distributions from your IRA up to the amount of your qualifying medical expenses and escape the payment of the 10% surtax remembering that regular federal income taxes will still be due. A little higher math is involved in that you may only withdraw monies from the IRA penalty-free to the extent that your qualifying medical expenses exceed 7 _ % of your adjusted gross income. Further, a distribution to cover these medical expenses also increases your AGI. Assume your AGI before the distribution is $100,000; you have $22,500 of medical expense of which $15,000 is eligible remembering that the first 7_% or $7,500 is ineligible. You might withdraw $15,000 from your IRA thinking it will all escape the 10% penalty. Unfortunately, the $15,000 is added to your AGI resulting in $8,625 of ineligible medical expense. Thus, $13,875 is protected and $1,125 is not resulting in a hidden۝ 10% penalty of $112.50. 2004-11-30 09:08, By: TheBadger, IP: [66.250.23.22]