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Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3153
Experience:  EA, CEBS - 35 years experience providing financial advice
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I am 37 and currently on SSI disability. Will I incur early

Customer Question

I am 37 and currently on SSI disability. Will I incur early withdrawl penalties for cashing out a 401K in order to pay my bills?
Submitted: 8 years ago.
Category: Tax
Expert:  Bill replied 8 years ago.

If you are considered permanently and totally disabled then the 10% early withdrawal penalty will not apply. If you are receiving social security disability benefits then you meet the definition. If you are receiving SSI (based on limited income and resources) rather than SSA benefits (income and resources are not considered) then the receipt of funds from the 401(k) may be considered income/resources which could penalize your benefits depending on the amount of the withdrawal.