SECURE 2.0 Act Section 334 permits retirement plans to distribute up to $2,500 per year for the payment of premiums for certain specified long-term care insurance contracts. The $2,500 will be inflation adjusted for years after 2024. Distributions from plans to pay such premiums are exempt from the additional 10% tax on early distributions. 

The provision applies to various types of retirement plans, including:

The long-term care insurance contracts eligible for these distributions must meet certain criteria to qualify for the exemption from the additional 10% tax on early distributions. Specifically, the policy must provide high-quality coverage, i.e., the insurance must meet the requirements set forth in new IRC Sec 401(a)(39)(C).

Effective Date: December 29, 2025 (3 years after date of enactment of this Act).