now if I am disabled when I roll over my 401..does the 10% penalty apply??

Question

I am 47 and occupationaly disabled , have 23k in 401k I understand the tax liability, but the plan person said that if I was disabled that the 10% could be waived..

Answer 1

You can withdraw without penalty if you can prove hardship. Your plan person should be able to provide the necessary paperwork for you to get the distribution from your 401(k).

Answer 2

There are 2 possible answers to your question, depending upon which action you take:

1) A properly executed roll over from a 401(k) plan to a traditional (non-Roth) IRA or another 401(k) account is not a taxable event. To make things easier, ask your plan provider to perform a "trustee to trustee" transfer so that the check is sent directly to your new IRA provider and you won't be tempted to go blow that $23,000 in Vegas.

2) If you are considering a withdrawal (read "distribution") of your 401(k) account, and you are disabled, check with your current plan provider or employer in order to determine if you meet the plan's definition of disability. If you do - and you need the money now - you can take a complete or partial distribution of your account. In this case, you won't be assessed a 10% penalty on the distribution, but you will be taxed (at your regular income tax rate) on the distribution amount. I am assuming in this scenario that all of your account consists of contributions that were made on a pre-tax basis.

Good luck to you.

Answer 3

If you are rolling it over to another fund, then there is no fine even if you are not diabled.

Do you mean that you are taking money out and not rolling it over? If so, then you can either talk with an accountant or you can read the IRS booklets on this. It will explain what is allowed and what is not.

Answer 4

2 issues here A rollerover done properly is not a taxable event and 10% is waived if disabled

Answer 5

Roll it over into a Traditional IRA and you'll be fine....