IRA Disability Rules
Hi!
I am working with a client who just became legally blind 2 months ago. Social Security has already told him he would be able to start getting disability in October. However, he needs some cash in the short term from his IRA, but he is not yet 59.5. Would this meet the strict disability requirements to avoid the 10% penalty?
Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2022-06-15 21:54
Yes. He should gather documentation of being legally blind and send a copy to his IRA custodian asking that they code any distribution with disability code 3. If they do not comply for some reason, client should still claim the penalty exception by filing Form 5329 and entering exception code 03. Not quite as good, but unlikely that the IRS would challenge it.