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Asked 2/13/2010
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Is a permanent and totally disabled spouse qualify for early distribution penalty exemption? My wife withdrew the entire amount of her 401K TSP in September of 2009 to pay off debt. I have been permanently and totally disabled since 1991 as her spouse. Does my disability status qualify us for an exemption on the 10% penalty for early distribution? We were both 56 at the time of withdrawal. |
Answer 1/1 - Submitted 2/13/2010
401(k) plans are "individual" and not "family" so your disability doesn't affect her tax or penalty.
But ...
If your joint medical expenses exceeded 7.5% of your combined income, even if you didn't file a Schedule A, then the amount that exceeds 7.5% could be excepted from the penalty
or
there is a provision that if the taxpayer (your wife) was over age 55 and separated from service (the employer she had the 401(k) with) at the time of the distribution, it is excepted from the penalty.
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