Long-Term Care Distributions From Defined Contribution Plans – This Is New!

Section 334 of SECURE 2.0 allows defined contribution plans to make “qualified long-term care distributions” without the additional 10% tax on early distributions under Section 72(t) of the Internal Revenue Code. It also imposes new reporting obligations on long-term care insurance issuers. This provision is effective for distributions made after December 29, 2025.

Recently-issued IRS Notice 2026-33 provides necessary guidance on long-term care distributions. Here’s what you need to know.

1. What is a “qualified long-term care distribution”?

A distribution made during the taxable year that does not exceed the least of the following:

• Premiums paid by or assessed to the employee during the year for certified long-term care insurance covering the employee or the employee’s spouse;