i read that i can have a Special Needs Trust established, and this trust protects the money i would use for medical expenses where SSD would not count it against my benefits. i read that the laws have changed for this trust so as long as you're mentally capable you can control the funds. what do i need to do to set up this trust?
i have 401k money with a former employer. can i use those funds for a one time withdrawl to help me with medical expenses? would i have to pay tax on that?
Please consult an elder law attorney re special needs trusts. There are different types of Special Needs Trusts and there are different ages when special needs trusts can be set up. You need an experienced elder law attorney who deals with special needs trusts. I know of no exemption from taxes for withdrawals from 401(k) plans since the contributions are not taxed when they are contributed but rather when they are withdrawn.
Employment / Labor Attorney
You need to speak with an estate planning attorney in your area about setting up a special needs trust.
If the 401k assets are available for distribution under the plan rules then you can take the distribution. It will be taxable to you as income although depending on your age and amount of medical bills you may be able to avoid the 10% early withdrawal penalty. Speak with a tax lawyer or CPA about your eligibility.