5329 Penalty Exceptions for IRA

[SunTaxMan]

As I read the regs, it appears that someone who is "totally, permanently disabled" can withdraw, regardless of age, without penalty. However, the "fine print" on form 5329 reads, as an exception, "Due to death or disability." Client is asking whether distribution needs to be BECAUSE of the disability in order to be exempt from penalty. My thinking is just to be disabled is adequate. He wants to buy a car, and expense totally unrelated to the disibility. Thoughts? Thanks.

[joanmcq]

He has to be totally and permanently disabled. Usually if they have received Social Security disability that is enough to win on audit.

[Lion EA]

He just needs to be disabled before the distribution. The distribution can be for his living expenses, whether or not specific to his disability. As Joan brought up, qualifying as totally and permanently disabled in the eyes of the IRS takes some documentation.