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Greetings, GLSHEFF, and welcome. You asked:

<<I notice that in your essays on Iras, you mention that there are seven exceptions to the 10% penalty for early withdrawals. One that is of interest but does not seem to be explained is number 1: Occur because of the IRA owner's disability.
How and by whom is the disability determined? Does one have to be disabled by the standards of the Social Security Administration?

Also, can one rollover a 401k and then withdraw from the resulting IRA without penalty if you are disabled?>>


Basically, the disability that qualifies under this exemption is the same as that for SSA disability. Under USC Section 72(m)(7), the disability must be a medically determinable physical or mental impairment that leaves the account owner unable to engage in any substantial gainful activity. Additionally, the disability must be expected to last indefinitely over a long period or result in death.

401k plans may permit early distributions under the same criteria. Alternatively, the 401k plan money may be transferred to an IRA after separation, and the distribution may come from that account.

Regards..Pixy
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