What to do with the tanking market when you become disabled
I am currently dusabled yet not officially declared so yet. SSDI takes forever and my traditinal IRA is tanking! I need that $ to help me survive! Can I withdraw or transfer without penalty???
Terry Says
First thing is to call your IRA custodian and ask them to sell all stocks — and keep the money inside your IRA in a money market fund. That guarantees you will lose no more money. (It also precludes you from regaining your losses if the market turns around!) I think at this point, limiting your losses is key.
Now that the money is safe, you can leave it inside your IRA until you need it. When you withdraw the money, if it is a “traditional” IRA, you will have to pay ordinary income taxes on it. But you may not owe much in taxes, if anything, if you don’t have any other income because of your disability.
Also make sure that any programs to which you are entitled, including SSI, have limits on assets outside of your home and retirement account. You want to remain qualified for any state and local programs. Ask your SSDI attorney about those.
