I'd like someone to point me in the right direction for information there may be on cashing in my SEP IRA immediately without penalty if I have a diagnosed terminal illness. I have about a year to go, maybe less. I do understand there will be tax to pay as it will be considered income. Tks.

There are two exemptions to the 10% early withdrawal penalty under Section 72(t) of the IRC that you may attempt to use. Based on the facts and circumstances of your case, neither may be applicable.

First, is disability under the definition of 72(m)(7). If you are out of work on Social Security Disability, you may have a good case. If you are still working and is just diagnosed with a terminal illness, then you may not meet this condition. Just remember, everything is facts and circumstances. A good argument on this issue may exist even if you are still employed.

This brings us to the second test, Medical Expenses that exceed 7.5% of your adjusted gross income. The medical expenses must satisfy a certain definition (I think is section 239 of the IRC or something ). This would appear to be a slam dunk, but the expense amount must be there.

Those are the only two exceptions I can think of for an immediate cashout prior to age 59 1/2. I am sorry for your condition and hope you find comfort in the near future.

So it appears you are under age 59 ½?
See IRS Publication 590 for list of exceptions
http://www.irs.gov/pub/irs-pdf/p590.pdf Page 41 of the 2005 version