The Internal Revenue Service (IRS) issued guidance in Notice 2026-33 related to qualified long-term care (LTC) distributions. Below are highlights from that guidance.

Under the SECURE 2.0 Act of 2022, defined contribution (DC) plans may allow for qualified LTC distributions. Key qualified LTC distribution considerations include:

• Must be used to pay certain LTC insurance premiums for employees or their spouses.
• Must be made in the same taxable year the premium is paid or assessed.
• Qualified LTC distributions are limited to the lesser of:
  • The annual premium paid or assessed for the calendar year,
  • $2,600 (effective for 2026 and indexed annually), or
  • 10 percent of the present value of the participant’s vested benefit under the plan.
• The LTC insurance provider (the issuer) must file an LTC premium statement with the plan prior to the qualified LTC distribution.

Below are highlights from the guidance:

• The issuer must file an Issuer Disclosure with the IRS. This disclosure must include contact information and must be signed under penalties of perjury. Additional requirements are available at irs.gov.
• After the issuer receives an acknowledgement letter from the IRS, a participant must ask the issuer to file an LTC premium statement with the DC plan.
• The DC plan administrator may rely on the issuer’s LTC premium statement that:
  • The Issuer Disclosure has been accepted by the IRS.
  • The LTC premium statement covers LTC insurance that meet the appropriate regulations.
  • The information in the LTC premium statement is correct.
• The qualified LTC distribution is NOT:
  • A required feature in a DC plan.
  • Eligible to be repaid into the DC plan.
  • Considered an eligible rollover distribution
• If a DC plan does not offer a qualified LTC distribution, participants may not claim that as a reason to be exempt from the 10% additional tax.

IRS Notice 2024-02 established these general amendment deadlines:

• Retirement plans that are not listed below – December 31, 2026
• Collectively bargained plans, including 403(b) plans maintained by tax-exempt organizations – December 31, 2028
• Governmental plans sponsored by federal, state, or local governments and their agencies – December 31, 2029
• 403(b) plans maintained by a public school - December 31, 2029

Notice 2026-33 extended the deadline for plans within the first bullet choosing to adopt qualified LTC distributions until December 31, 2027. The extension only applies to qualified LTC distributions.