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Two Questions

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andyxoxo

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Hi, not sure what section to post these two questions so here goes:

1) Anyone know if being rated by the VA as 100% schedular or TDIU satisfies the IRS requirement as being totally disabled in order to be able to make IRA withdrawals penalty free before age 59 1/2? Or would I have to be approved for SSDI as well?

2) Are VA retro payments based on year's past rates or the current year's rates? For example, in 2012 we get a 3.6% raise on our disability payments. But let's say my NOD is approved in 2012 and am thus owed a couple of years backpay on my new rating. Will those back payments be entirely based on the new 2012 rates (with the new 3.6% increase included) or a mixture of the previous years' rates with the current year's rate.

Thanks, ANdy

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  • HadIt.com Elder

At 100% TDIU I have withdrawn IRA money & not paid the 10%.

The pay is whatever you would have been paid in that year or years. You don't draw 2012 pay rate for 2007 period because it was awarded retro to 2007. Good try, think we can get the VA to approve?

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  • HadIt.com Elder

Retro (back pay) is based upon the rates in effect during the time that the retro covers. (Minus any previous payments for the same periods.) IE This can occur when a rating increase is retroactive, or payment was made for a lower % condition that is separate from a retroactive 100% or TDIU rating. I.E. You were SC'd for DMII at the usual 20%. A retroactive award for another SC'd condition was granted, based upon a Nehmer review at 100%. The previously made payments for the 20% are deducted from the 100% retro due as a result of the Nehmer review's additional retroactive award.

As to income credits, etc. The forms to claim this require that you disclose VA payments and other nontaxable income. I'm against this in principal, and every time I bothered to fill out/use the forms, The result was that I could not claim the credit.

As to IRS rules

http://www.irs.gov/i...=168606,00.html

(Page leading to info, etc. for disabled taxpayers)

In any event, a doctors statement that you are disabled, and so forth, is covered in IRS publications and instructions.

(It would seem that you have several options to show the IRS that you are "P&T")

I don't know anything about your VA disability rating. SSA uses different rules than the VA. As a result, it's possible to be disabled by the VA and not disabled by SSA.

Or, SSA considers you to be totally disabled by the same conditions that the VA rates at lower percentages. This is where VA "TDIU" can come into play.

SSA can lump together conditions that the VA rates as unrelated co-existing conditions.

Hi, not sure what section to post these two questions so here goes:

1) Anyone know if being rated by the VA as 100% schedular or TDIU satisfies the IRS requirement as being totally disabled in order to be able to make IRA withdrawals penalty free before age 59 1/2? Or would I have to be approved for SSDI as well?

2) Are VA retro payments based on year's past rates or the current year's rates? For example, in 2012 we get a 3.6% raise on our disability payments. But let's say my NOD is approved in 2012 and am thus owed a couple of years backpay on my new rating. Will those back payments be entirely based on the new 2012 rates (with the new 3.6% increase included) or a mixture of the previous years' rates with the current year's rate.

Thanks, ANdy

Edited by Chuck75
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  • HadIt.com Elder

The rules are complicated when you are under 59-1/2. But, If you have a doctors brief signed statement of disability per the IRS Pubs, and you file it or have filed it in the past, The penalty is waived. But, the money from the IRA will be subject to tax. (unless it's a Roth IRA, which has the tax already paid.

These days, one of my tax related tasks is to calculate how much I can withdraw from an IRA each year without hitting income limits that would increase the income subject to tax, or the rate.

I'm still unhappy about the years that the VA delayed things, and I had to draw on capitol to survive. At least I was more fortunate than some.

I think the IRS rules on IRA withdrawals are sort of tricky. I think I would have a CPA look at it and get an expert opinion.

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