What: SECURE 2.0 created a new 10% early distribution penalty exception for individuals who are terminally ill
Key Dates: Effective for distributions made after 12/29/2022
Impacted Audiences: Individuals with a 401(a) defined contribution plan, 457(b) plan or IRA who have been deemed terminally ill (may also impact other plan types not offered by MERS)
For More Information: Click "Read More" below
Exception to penalty on early distribution for individuals with a terminal illness
Creates a new 10% early distribution penalty exception for individuals who are terminally ill. For purposes of this exception, the individual is deemed to be “terminally ill” if they have “been certified by a physician as having an illness or physical condition which can reasonably be expected to result in death in 84
months or less.” Except for distributions from defined benefit plans, such distributions may be repaid within three years in the same manner as qualified birth or adoption distributions.
This change is effective for distributions made after 12/29/2022.
More information: MERS SECURE 2.0 Resource Page