How To Make Withdrawals From A 401k Due To Permanent Disability

[coconutvee]

I have a 401K that I want to withdraw and want to confirm if I can use VA Form 21-0172 to avoid the 10% penelty for withdrwing early ( I'm younger 59 1/2). I called the VARO and the lady I spoke with never heard of VA Form 21-0172. She said that she had to ask a supervisor and got all my info. Has anyone here used this form before? I'm 100% P&T.

[jbasser]

Here is what I did.

Contacted my employee administrator at work. Had them to contact the 401K bank and have them refund your 401K account.

DO a disability withdrawal. They will send you a 1099 and it will have the amount and the 20 percent. The 10 percent will no t be on there. There is a box with certain codes on the 1099 that should have the correct code in it.

I was charged the extra 10 percent fromt he bank and I had to threaten to sue bank and employer befoire they got it right.

J

[coconutvee]

Wow that is crazy that you would have to threaten with a lawsuit. My old empolyer says that I have to deal directly with Merill since I no longer work for them. I contacted them and they say I can get 80% and that I'll have to deal with the IRS about the 10% penelty. So do I need Merril Lynch to write it up as a hardship withdrawl?

[john999]

Maybe you should talk to a CPA or tax lawyer to see just what you have to do and how to avoid the penalty. You can roll the 401-K money over into an IRA and pay no tax. Then you would not be dealing with all the 401-K stuff. You would still have the tax problems, but the money would be under your direct control instead of a 401-K administrator. If you have a standard pension you can roll that payout amount into an IRA as well. It is always better to have the money under your control I think.