The IRS lists several situations in which a customer may take a distribution from his/her IRA without incurring the early distribution penalty. I have attended IRA seminars and various scenarios are covered. My question concerns the disability exception. The presenter stated rather bluntly that we should not require proof (doctor's note, award letter, etc.) for a disability distribution. It was stated that banks have been dinged for requiring this information, since "we aren't doctors and aren't trained to determine what is/is not a qualifying disability." However, no specific examples were provided.
Is there any risk to requiring "documented proof" of disability before coding a distribution as such? I know in the lending world banks have gotten in trouble for requiring excess documentation - can the same be said here? Do any of you require the award letter or a doctor's note?
Any feedback would be greatly appreciated. If you know of any banks that have gotten in trouble for requiring it can you provide the info?
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