Discussion:Early distribution exceptions

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Discussion Forum Index --> Tax Questions --> Early distribution exceptions


Ztom (talk|edits) said:

17 February 2007
Have a customer who was told by Medical she had to takel her 401 to be eligible for Medical help. She had to take care of grandchild and no longer works. Has anyone heard of hardship as an excuse for penalty. She is only 49.

Kevinh5 (talk|edits) said:

17 February 2007
Sec. 72(t)

WesR (talk|edits) said:

17 February 2007
Hi grandchild needs to be a dependent to take the medical exception to the 10% penalty tax. bye

Death&Taxes (talk|edits) said:

17 February 2007
What I am reading this to say is that she had to take the money to qualify for assistance, so that she had no assets [though why the 401K money in the bank would not be an asset I cannot explain].

Kevinh5 (talk|edits) said:

17 February 2007
there is a difference between the plan administrator's definition of "hardship" for allowing an employee to make an in-service withdrawal and the IRS' rules for avoiding tax and/or penalties.

Riley2 (talk|edits) said:

18 February 2007
The 401(k) regulations allow for in-service distributions if the taxpayer can demonstrate hardship, such a a impending foreclosure. However, this does not eliminate the 10% penalty. Suggest trying the medical exception if the child satisfies the Sec. 213 definition of a dependent (not the same definition as the regular dependent rules).

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