The IRS dictates that investors must be totally and permanently disabled before they can dip into their retirement plans without paying a 10 percent penalty.

The easiest way to prove disability to the IRS is by collecting disability payments from an insurance company or from Social Security.

"That is excellent proof that you are disabled, if you're getting benefits from the government and from a private insurance carrier," he says.

Read more: How to take penalty-free withdrawals from an IRA or 401k http://www.bankrate.com/finance/reti...#ixzz1wNUg0Loc