Many of my disability clients find themselves in dire financial circumstances as a result of their inability to sustain full-time employment.

Social Security Disability and SSI cases can take up to two years for a decision to be reached.

Usually, the initial decision takes four to six months. If it is a denial, the reconsideration may take another four to six months. If the reconsideration is a denial, then applying and waiting for a hearing by an Administrative Law Judge may take up to a year or slightly longer.

Even after beginning to receive cash disability benefits, many disabled people still find themselves suffering financial difficulties. After all, the disability program is intended only as a lifeline and is by no means luxurious. Disability benefits are almost always much lower than the income a person was receiving while still employed, typically in the range of about $1,000 to $1,500 per month.

With respect to distributions from 401(k) and/or IRA retirement accounts, the general rule is that withdrawals before age 59 ½ are subject to an early withdrawal penalty of 10%.

However, there are exceptions to this rule. One of the most important exceptions is for individuals who are permanently and totally disabled.

The definition of permanent and total disability is a medical impairment determined by an examining physician that prevents a person from working and has lasted or is expected to last for at least one year or result in death.

This exception is set forth at Internal Revenue Code Section 72(t)(2)(A)(iii).

In making a determination whether or not to take early withdrawals from qualified retirement plans, many factors come into consideration. There is not one size fits all formula for making this decision. It is usually best to consult with a financial advisor or similar competent professional in making the decision whether or not to take early withdrawals from a retirement plan.

This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.