Employee Stock-Ownership Plans (ESOP)

Check your Plan to find out if it allows for an early withdrawal due to disability If it does, it will generally include one of the following requirements.

• You must qualify for disability under the Social Security laws such as Social Security Disability Insurance (SSDI). To learn what that means, as well as how to improve your chances of obtaining disability status, see: SSDI: 101.
• The Plan may have its own definition of "disability." For instance, the plan may define disability as your being unable to do your current job (as compared to the more general definition in the Social Security law which relates to being able to do any job for which you are qualified). If a plan includes its own definition of disability, it usually only requires a doctor's written opinion stating that you are disabled. The plan may reserve to the administrator the right to confirm the disability - for instance, through direct contact with your doctor, by requesting a copy of your medical records, or by having a second opinion.

If you have questions about your Plan's definition of "disability," or how to qualify, ask your plan administrator.

The IRS has the right to question whether you are indeed disabled within the Plan's definition. However, as a general matter, the IRS seems to only check to determine if the plan has such an exception, not whether your particular situation fits the definition.

NOTE: Keep in mind that even though the amount of your withdrawal is not subject to penalty for early withdrawal, it is subject to ordinary income tax.

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