Rule Allowing Penalty-Free 401(k) Withdrawals for Longterm Care Insurance Now in Effect - Articles

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Posted by: Jarod Word on Jan 28, 2026

A rule allowing 401(k) plan participants to use penalty-free withdrawals to pay for long-term care insurance is now in effect. Part of the Secure Act 2.0, this provision allows contributors to use up to $2,600 annually for qualified premiums. The rule is currently discretionary, and 401(k) sponsors can ultimately determine if they will offer this benefit. Experts say it might take some time for meaningful adoption, with companies and insurers awaiting guidance from the IRS regarding scope and application of the rule. There is also uncertainty over whether the full premiums for a hybrid policy would qualify. CNBC has more.