SEPP WITH DISABILITY

L1: SEPP WITH DISABILITYI started a SEPP about 5 years ago using the Amortization Method. On 1/1/2004 I changed to the Life Expectancy(minimum) Method. I recently became disabled—–SSD can I now bust my SEPP without penalty?2005-11-25 11:26, By: edzell57, IP: [24.191.104.88]
L2: SEPP WITH DISABILITYBy definition, busting a SEPP implies that you will pay a penalty.
However, if you are disabled, you don’t need to bust the SEPP as disability is one of the defined reasons to terminate a SEPP.
Start by contacting the Trustee/Custoodian of your IRA to see if you meet their definition of Disability.
2005-11-25 11:59, By: Gfw, IP: [172.16.1.70]

L2: SEPP WITH DISABILITYedzell57-several years ago, I asked a national company which specializes in qualified plans and to which I pay an ongoing fee to answer such questions if receiving SSD was enough to satisfy the disabled requirement for not having to pay the 10% penalty if you are under 59.5. At that time, they were unaware of any IRS PLR or Revenue Ruling which answered this definitively. Perhaps gfw or the Beaver knows of some definitive answer. If no,and if the back 10% penalty on all you have withdrawn would be substantial, I would urge you not to take a chance-better safe than sorry. I would have someone like the Beaver get a PLR to get an answer for your specific case facts. It will cost to do this, but if there is much money involved, it will be worth it. Good luck and sorry to hear about your health problem2005-11-26 10:37, By: john, IP: [24.182.94.66]

L2: SEPP WITH DISABILITYCertainly if a taxpayer is disabled they may make early withdrawals w/o penalty and can further terminate ro modify a SEPP plan w/o penalty.
The IRS test for “disability” is three part: (1) it is total (as opposed to being partially disabled); (2) it is permanent expected to be of long duration or resulting in death; (3) tests (1) & (2) are aplied in the context of the taxpayers pre-disability occupation.
Thus, to clarify test #3, two brothers are in an accident and become paraplegics (loss of both legs). One is a surgeon and one is professional football player. The football player is disabled, the surgeon is not.
Furthermore, tests #1 and #2 are moving targets over time; e.g. at one time having just about any form of cancer was considered a disability; now, lung cancer is not but most forms of pancreatic cancer are as the mortality rate for the later is still almost 100%.
Generally, the most persuasive evidence that one is disabled comes from the SSA; e.g. the IRS does not want to “buck heads” with theDept. of Labor. To this end there are twoPLRs on point”: 1993-18043 & 1990-18047.
TheBadger
wjstecker@wispertel.net
2005-11-27 08:14, By: TheBadger, IP: [66.250.23.21]