I have read on the internet that being disabled can exclude you from paying the 10% early IRA withdrawal penalty. I also read that you have to be in an institution or under constant supervision. I was institutionlized 2 years ago but was released and am under a doctor's care for making sure I am on the proper medications. I have schizo-affective disorder bipolar type, post traumatic stress syndrome, depression and anxiety and even though I live by myself, drive and take care of myself, I still have problems with being around people and getting stressed out and sick over minor issues. Would I have any chance of avoiding the 10% early IRA withdrawal penalty under those circumstances?
Country/State/Province of question: Louisiana
Nothing so far.
Hi from Just Answer. I believe you qualify for relief from the 10% penalty.
have you requested the IRA trustee treat the IRA distributions as exempt from the 10% penalty?
No, I haven't. I was going to file an amended return to try to recoup the penalty I paid on my 2011 taxes. Do I need something from my IRA trustee?
best to ask them to amend their 1099 for your distribution as exempt due to disability.
Then do I file an amended return to recoup the 10% penalty I paid?
yes. then you file the amended return.
So contact my IRA trustee, have them get me the proper paperwork and file an Amended Return? Do I need to attach any other IRS forms to my amendment, or just the exemption paperwork from my IRA trustee?
once IRA trustee approves, and sends you amended 1099R, just send a copy of amended 1099R with amended return. Note IRS does not require the 1099R be attached. It should be enough to support your exemption. I would not send any additional support with the return.
is there something more I can help with?
Will the IRS investigate my disability payments, etc.
Could they cause me problems with the Social Security Admin?
that is not likely. the amended return will be reviewed at processing by IRS. If the 1099R is amended, and you include a copy, that may be enough for IRS to process your return and not look further. If they do, and see you have other disability income, that only strengthens your amended return claim.
The facts do not support IRS causing any problems.
Thank you. I am going to try this and see if it works. Do you have any other suggestions for me?
No, your question was straightforward and there seems to be a good solution for you. Thanks from Just Answer, and please leave positive feedback.
I will. Thank you!!!
Tax professional and business consultant for 30 years.