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Old 01-21-2014, 03:31 PM
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IRA Early Withdrawal / Disabled

I made an early withdrawal on my regular IRA because I am totally and permanently disabled. I am 49 years old. I received my 1099-R and the distribution code they entered was 1, not 2 (or 3?). I called them and they asked if I had submitted a doctor's note or some proof of disability at the time. I said no, I did not know I had to. They said it was too late to make that change and to contact a tax consultant for how to handle this. Any ideas? Thank you.



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Old 01-21-2014, 10:34 PM
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Originally Posted by derekpw View Post
I made an early withdrawal on my regular IRA because I am totally and permanently disabled. I am 49 years old. I received my 1099-R and the distribution code they entered was 1, not 2 (or 3?). I called them and they asked if I had submitted a doctor's note or some proof of disability at the time. I said no, I did not know I had to. They said it was too late to make that change and to contact a tax consultant for how to handle this. Any ideas? .
in general, You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration.i guess you may file amended return and submit a doc’s proof ;You, at any time, must be able to furnish written proof of the doctor's determination if requested to do so by the IRS.please contact theirs for more info in detail



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Old 01-21-2014, 11:48 PM
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?

An amended return? I have not even filed yet. I am filling the return out now and got the 1099-R. The code in box 7 is a 1, early withdrawal without exception. It should be either 2 or 3. Do you know what code it should be? I am 49 with permanent disability. So, I do not know what I should do since the code is wrong.



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Old 01-22-2014, 09:22 PM
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Originally Posted by derekpw View Post


#1;An amended return? I have not even filed yet. I am filling the return out now and got the 1099-R. The code in box 7 is a 1, early withdrawal without exception. It should be either 2 or 3.



#2;Do you know what code it should be? I am 49 with permanent disability. So, I do not know what I should do since the code is wrong.
#1;Sorry for that ; it is my bad;as yu can see, an early w/d from your IRA can make you subject to some significant penalties and taxes that you must calculate on your next tax return.( Early w/d from either a traditional IRA or a R-IRA are usually considered to be non-qualified. Non-qualified withdrawals are subject to both ordinary taxation at the account holder's then current marginal tax rate plus a 10% tax penalty on the amount withdrawn.).I presumed you must have already paid estimated taxes on the early w/d penalties reported on line 60 on 1040 and it is 10% of the amount on line 15b to the IRS. Generally, you calculate the additional tax penalty directly on Form 5329 if you meet one of the exceptions and the retirement plan did not report the exception on Form 1099-R box 7.

#2; The Distribution code 3 is a distribution due to the disability and is an automatic exception to the 10% penalty. There is no need to file the 5329 for any distribution in which the 1099R reflects Distribution code 3.

You need to report the distribution on line 15A of the 1040 ,11A of the 1040A, and put the taxable portion on line 15B of the 1040 or line 11B of the 1040A And if there is no Federal withholding in Box 4 do not attach a copy of the 1099R to your return, you would only attach the 1099R if Federal taxes are withheld. If not, I guess, you need to attach form 5329 and show the disability exception to the 10% penalty. Line 2 Code 3 disability on Form 5329 will eliminate your problem.
I guess you can contact the IRS for more info in detail.



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Old 01-23-2014, 12:52 PM
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lol.................................



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