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March 28, 2022
Question

If i am receiving ssd do i qualify for any tax breaks for taking my retirement funds

  • March 28, 2022
  • 2 replies
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are there any tax breaks on early withrawal of retirment funds for becoming disabled

2 replies

VolvoGirl
Employee
March 28, 2022

What is it from?  A 401K or IRA account?  If you are under 59 1/2 you can avoid the 10% Early Withdrawal Penalty for Medical.  

FYI - the withdrawal may make some of your SSDI taxable.  You have to enter all your income.

March 28, 2022

It depends.  The tax break would come from not having to pay any penalty for early withdrawal (before age 59 1/2 for IRAs or before the plan's normal retirement age for 401(k)s).

 

If you do not have any 'after-tax' money invested in the plan, you will pay income tax on the full amount of the distribution for your federal return.  Each state has their own laws in regards to pension income.  You can check your state page for their rules.

If you have any 'after- tax money invested, meaning you paid tax on the money that went into the plan because it was not tax deductible, you may have a portion of your retirement funds that is nontaxable.  

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