I am 62. My wife is 54. She is on SS Disability. We live in California. She has money in a 401K from her previous employer, from whom she is on disability. We would like to take a partial withdrawal. What are the penalities? Are there special provisions because of her disability status?

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Originally Posted by royscott95821

I am 62. My wife is 54. She is on SS Disability. We live in California. She has money in a 401K from her previous employer, from whom she is on disability. We would like to take a partial withdrawal. What are the penalities? Are there special provisions because of her disability status?

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There is an exception to the 10% penalty for someone who is "totally and permanently" disabled. The IRS definition is below:
What Is Permanent and Total Disability?





A person is permanently and totally disabled if both 1 and 2 below apply.

1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
2. A physician determines that the condition has lasted or can be expected to last continuously for at least a year or can lead to death.

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Originally Posted by walt17

There is an exception to the 10% penalty for someone who is "totally and permanently" disabled. The IRS definition is below:
What Is Permanent and Total Disability?





A person is permanently and totally disabled if both 1 and 2 below apply.

1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
2. A physician determines that the condition has lasted or can be expected to last continuously for at least a year or can lead to death.

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Thanks for your response.
We contacted Lincoln Life, and received the same answer. However, they did not inform us of the IRS information. My wife meets both of the criteria.
Just to let everyone who reads this Know:
The fund is doing very well, and earns from 12 to currently 15.8 effective annual percent. So, we want to take only what we need for now, and let the rest grow back to the original amount. This should happen in about 5 years. We plan to wait until January to withdraw, so that the 20% Income Tax withheld will occur for 2007.

Thanks again,
Roy W. Scott

Does anyone have an IRS Code number reference for this definition?

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Originally Posted by nesmith

Does anyone have an IRS Code number reference for this definition?

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Please clarify your question - I'm not sure what an "IRS code number" is.

However, if what you mean is what is the "distribution code" that is reported on your 1099-R if you trake a distribution from your 401(k) due to disability, it is code 3.

Fart nog