Early withdrawal Penalty (10% exception)

[Nassau]

IRC Section 72(t)(2)(A)(iii) provides that no penalty will be applied to distributions that are attributable to the employee's being disabled within the meaning of subsection (m)(7). What is the meaning of subsection (m)(7)?

[masteff]

Generally speaking, it's what is referred to on the health and welfare side as "total and permanent" disability, such as might be determined under Social Security disability or under a long term disability insurance program.

http://www.law.cornell.edu/uscode/text/26/72

"(7) Meaning of disabled

For purposes of this section, an individual shall be considered to be disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to be disabled unless he furnishes proof of the existence thereof in such form and manner as the Secretary may require."