Can 403(b) Plans Permit Distributions for Long-Term Care Premiums?

Q: I hear that there is a new SECURE 2.0 provision that will allow for distributions of up to $2,500 to pay for long-term care insurance premiums, beginning in 2026. Is this true, and can I add such a provision to our 403(b) plan?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Yes, it is true that this distribution provision for long-term care insurance premiums is part of SECURE 2.0 and it can be added to all retirement plan types, including 403(b) plans.

Note that this provision is effective for distributions made after December 29, 2025. Also note that the $2,500 limit is actually $2,600 for distributions for those two days in 2025 when the provision is first effective (see this 2025 IRS limits notice for details); this dollar limit is indexed for inflation in $100 increments, so it could increase for 2026 (although we won’t know until the IRS announces indexed limits for next year.)

The distribution is not subject to the 10% premature distribution penalty, and, if the plan permits via a plan amendment, in-service distributions may be allowed for this reason.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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