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my client has 41k in her 401k plan. she is 55 yrs old and last

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my client has 41k in her 401k plan. she is 55 yrs old and last year she became disabled. she needs to move her 401k money to ira but rather then that she would like to donate the entire amount to cheritable organization. the question is if she does this:
1). does she still have to pay 10% penalty for early withdrawal?
2) will this amount consider as an income on her 1040 or a deduction on her schedule A
3). can she donate the entire amount or is there a limitation

once again she is on permanent disability
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Q: does she still have to pay 10% penalty for early withdrawal?

A: In order for your client to make a tax free QCD (Qualified Charitable Distribution), the funds would have to be rolled over to an IRA first, and she would need to be the age of at least 70-1/2 years old.

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Q: will this amount consider as an income on her 1040 or a deduction on her schedule

A: As your client is not the age of 59-1/2 years old, but she became disabled (I am assuming permanantly disabled), she can withdraw the funds and not have to pay the 10% early withdrawal penalty, but the distribution itself is taxable as ordinary income.

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Q: can she donate the entire amount or is there a limitation

A: If your client had the funds in an IRA, and she was at least 70.5 years old, the limitation amount for the QCD is $100,000 per year.

REFERENCE SOURCE:

http://www.360financialliteracy.org/Topics/Retirement-Planning/IRAs/Qualified-Charitable-Distributions-Qualify-for-RMDs

You may also find information on the IRS page found at the following link to be beneficial to you as well;

http://www.irs.gov/Retirement-Plans/Charitable-Donations-from-IRAs-for-2012-and-2013

Please let me know if I can be of further assistance to you regarding this matter.

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