Taking a long look at SECURE 2.0’s long-term care distributions 

SECURE 2.0 doesn’t explicitly say offering qualified long-term care distributions is optional for plans. Notice 2026-33 confirms that plans aren’t required to offer the distributions.

SECURE 2.0 says qualified long-term care distributions may be used to pay premiums for coverage for the employee and the employee’s spouse. The law also authorizes the Treasury Department to extend eligibility to any other family member of the employee by regulation. However, Treasury did not extend eligibility to other family members in the notice.

Qualified long-term care distributions taken during the calendar year must be used to pay premiums for that same year. The total distributions for the year can’t exceed the least of the following amounts:

• The premium paid by or assessed to the employee during the year
• 10% of the employee’s vested account balance
• $2,600 (this is the indexed amount for 2026 as reported in Notice 2026-33)

SECURE 2.0 says qualified long-term care distributions satisfy the distributable event rules for 401(k), 403(a), 403(b), and 457(b) plans. This means plans can offer the distributions as a standalone option, even to employees who aren’t otherwise eligible to receive a distribution from the plan. However, Notice 2026-33 clarifies that, for 457(b) plans, only eligible 457(b) plans sponsored by governmental employers can offer the distributions. The notice also confirms the distributions can come from amounts attributable to elective, qualified nonelective, qualified matching, or safe-harbor contributions.

SECURE 2.0 exempts qualified long-term care distributions from the 10% penalty tax on withdrawals before age 59-1/2. Notice 2026-33 clarifies that the penalty relief is available only when qualified long-term care distributions are made from an employer-sponsored plan. Unlike certain other distributions allowed under SECURE 2.0, if the plan doesn’t offer qualified long-term care distributions, employees that receive an otherwise permissible plan distribution can’t take advantage of the penalty relief for these distributions on their tax returns. Also, distributions used to pay premiums for the employee’s spouse are exempt from the penalty only if the employee and spouse file their taxes jointly.

SECURE 2.0 provides that qualified long-term care distributions aren’t eligible rollover distributions. The notice explains that this means:

• The distributions can’t be rolled over to another employer-sponsored plan or IRA.
• Plan administrators don’t have to provide a 402(f) rollover notice to employees that request a distribution.
• The distributions are treated as nonperiodic distributions subject to 10% withholding unless the employee elects different or no withholding (i.e., mandatory 20% withholding doesn’t apply).

The notice confirms that SECURE 2.0 doesn’t give employees an extended three-year period to repay and recoup the taxes paid on a qualified long-term care distribution. (This extended repayment period is available for certain other penalty-free distributions under SECURE 2.0 — for example, distributions for personal emergency expenses.)

SECURE 2.0 says a distribution can’t be treated as a qualified long-term care distribution unless a long-term care premium statement has been filed with the plan administrator. The employee must request a premium statement from the insurer for each year that a qualified long-term care distribution is requested. The insurer must then send a premium statement to the plan administrator that includes the following information:

• Insurer’s name and taxpayer identification number (TIN)
• Statement that the coverage is certified long-term care insurance
• Identification of the employee who owns the coverage[1], the individual covered by the insurance, and the individual’s relationship to the employee
• Premiums owed for the calendar year
• Statement that the insurer has provided the “issuer disclosure” to the IRS discussed below.

Notice 2026-33 says the plan administrator can rely on the premium statement for the following:

• That the coverage is for certified long-term care insurance as discussed above
• That the insurer has provided the required issuer disclosure to the IRS
• Other information about the coverage provided in the statement (for example, the amount of premiums owed for the year)

The notice confirms that plans must report qualified long-term care distributions to the IRS on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

Notice 2026-33 extends the SECURE 2.0 plan amendment deadline for amendments adding qualified long-term care distributions to nongovernmental and noncollectively bargained plans. Sponsors of these plans that begin offering the distributions during the SECURE 2.0 remedial amendment period now must adopt conforming amendments by December 31, 2027. This is one year later than the deadline that applies to these plans under Notice 2024-2 for most of the other SECURE 2.0 required and discretionary amendments. 

For collectively bargained plans and governmental plans, the deadline to adopt amendments adding qualified long-term care distributions is the same deadline that applies to other SECURE 2.0 amendments under Notice 2024-2: December 31, 2028, for collectively bargained plans and December 31, 2029, for governmental plans.

As noted above, a plan administrator of a plan offering qualified long-term care distributions can’t accept the required premium care statement unless the insurer has provided the required issuer disclosure about the coverage to the IRS. Notice 2026-33 says the issuer disclosure must include the following information:

• Insurer’s name, contact information, and TIN
• General description of the type of long-term care coverage provided
• Statement that the coverage is certified long-term care coverage as discussed above
• Statement that the coverage has been filed with and approved by a state regulatory authority and the identity of that state authority 
• Penalties of perjury declaration

Additional information about these content requirements and the procedures for submitting the issuer disclosure to the IRS are available on the IRS’s website. 

An insurer that issues the long-term care premium statement discussed above must file an information return with the IRS by February 1 of the year after the premium statement was filed with the plan. Notice 2026-33 says insurers must use Form 1099-LPS, Long-Term Care Premiums Paid Statement — a new form IRS has created for this purpose. The notice also clarifies that if the insurance contract covers more than one individual, a separate Form 1099-LPS should be issued for each covered individual and identify only the portion of the premium allocable to that individual.

SECURE 2.0 says the insurer must also provide every individual identified in the Form 1099-LPS a statement showing the insurer’s contact information and the total premiums paid during the year. The statement must be provided no later than January 31 of the year the Form 1099-LPS is required to be filed with the IRS (one day before the deadline for submitting the Form 1099-LPS to the IRS). Notice 2026-33 says the insurer can satisfy this requirement by providing a copy of the Form 1099-LPS.

In addition, any individual to whom the required written statement must be provided can request one at any time during the calendar year to which the coverage relates. The insurer can satisfy this requirement by providing a Form 1099-LPS with partial-year information to both the individual who requested it and to the IRS within a reasonable period of time after the request. (The insurer still must satisfy the Form 1099-LPS reporting requirements for the full calendar year by the usual deadlines.) Alternatively, the insurer can provide the individual with a copy of the long-term care premium statement or a separate statement (such as an account statement or bill) identifying the name, address, and phone number of a contact person for the insurer and the total premiums and charges paid for the year as of the date of the request.