Medical Hardship

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L1: Medical HardshipI have a client that has been drawing an income off 72t for 10 months now. She is waiting to qualify for SSI and needs money out of her account. She is going for surgery on her shoulder and having a nerve block injection. Can she waive a 10% retroactive penalty under a financial hardship?2003-07-23 11:28, By: Emerald, IP: [127.0.0.1]
L2: Medical HardshipHello Emerald:
Perse, there is no exception for medical/financial hardship; therefore additional monies removed from the account, presuming she is under age 59 1/2 would be subject to the 10% surtax.
However, there are two other exceptions which might come into play: (1) exception #3, disability (complete and total) or #8 Medical expenses (but only in excess of the 7.5% of AGI floor). It gets evenmessier. I suspect that you are considering taking additional monies out of the same IRA as the SEPP distributions. No one has ever tested, and the IRS has never ruled on making multiple withdrawals from the same IRA when one set of withdrawals are the SEPP withdrawals and another withdrawal is also qualified but for a different reason. In short, we are no man’s land.
I have had this question arise before & unforntuately had to respond the same way. The right answer, if the dollars are material enough is to get a private letter ruling. The only wrong thing to do is to simply withdraw the additional funds praying you are right.
TheBadger
wjstecker@wispertel.net

2003-07-23 12:36, By: TheBadger, IP: [127.0.0.1]