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I want to tackle the retirement and protection needs of individuals. This website content is intended for use by Financial Professionals.

Penalty-free access to retirement funds for emergencies 

Participants in crisis are no longer penalized for accessing retirement funds

SECURE 2.0 introduces six new ways that participants in crisis may access retirement funds without incurring an early withdrawal penalty.

How is SECURE 2.0 relevant to you?

Select one of the options below to learn more.

U.S. Natural Disasters

Due to the frequency and severity of hurricanes, wildfires, and other natural disasters, retirement industry analysts expect such emergencies to account for a greater share of withdrawals in coming years.


Source: The Wall Street Journal, “Americans Tap 401(k) Plans After Hurricanes and Natural Disasters,”
Oct. 4, 2022

Participants of 401(k), 403(b), governmental 457(b) and individual retirement plans can now receive penalty-free Qualified Disaster Recovery Distribution (QDRD) when affected by natural disasters occurring on or after January 26, 2021. However, there are some important details about eligibility and dollar limits.

To be eligible, participants must have sustained an economic loss, and their primary residence must have been in the disaster area.

  • The maximum distribution is $22,000 per disaster aggregated across all employer-sponsored and individual retirement plans.
  • The maximum loan is the lesser of $100,000 or 100% of the vested account balance. Plans can also suspend loan repayments for up to one year (requires loan extension).
  • In addition, the QDRD must be made within 179 days after the later of the first day of the incident period or the date of the disaster declaration (for example, for disasters that occurred between January 26, 2021, and December 29, 2022, the deadline was June 27, 2023).

There are some things money can’t buy

According to, Americans spent nearly $365 billion for end-of-life care. Sadly, during the last months of life, estimated out-of-pocket expenses for patients who did not (or could not) chose a hospice benefit from Medicare was $28,000.2 Effective December 29, 2022, plan sponsors may offer terminally ill participants who are younger than 59½ penalty-free distributions from their retirement plans. You should read more information below about participant eligibility and dollar limits.

To be eligible, participants must present plan sponsors with a physician certification (sufficient evidence) that the employee has an illness or physical condition reasonably expected to result in death within 84 months. The amount of the distribution can be up to 100% of the participants’ vested account balance.

Distribution and loan repayment options. Participants who take penalty-free distributions due to a natural disaster or terminal illness may have the option to repay all or a portion of the distribution over three years.

  • Repayment of natural disaster distributions will be treated as if the distribution was an eligible rollover distribution and as having satisfied the requirements for a 60-day rollover—if the plan accepts rollovers.
  • In addition, participants who take QDRD can repay the distribution regardless of their eligibility to contribute to the plan. However, repayments of distributions for terminal illness can only be made if the participant is otherwise eligible to contribute to the plan.

Tax treatment. In general, QDRDs are included in a participant’s income, and taxes can be spread out over a three-year period. QDRDs are not eligible rollover distributions, therefore plan sponsors do not need to give a 402(f) notice to participants. Distributions for terminal illness are included in income in the year received. In addition, there is currently no guidance on whether plan sponsors must provide a 402(f) notice for distributions to a terminally ill employee.

Required plan amendments. Qualified plans that want to offer distributions and loans to participants who are affected by natural disasters or terminal illness will need to amend their plan documents by the end of the plan year in which this option is offered to participants.

SECURE 2.0 Provisions Effective in 2024 and Beyond

According to the National Coalition Against Domestic Abuse, “Domestic violence is prevalent in every community, and affects all people regardless of age, socioeconomic status, sexual orientation, gender, race, religion, or nationality.”3

Victims of domestic violence have a viable way out

The physical and mental effects of domestic violence are often compounded by economic insecurity. Victims of domestic violence have lost an estimated 8 million days of paid time off and nearly 60% of victims lose their jobs as a direct result of violence by their spouse or intimate partner.3 Effective for plan years beginning in 2024, SECURE 2.0 provides an exception to the 10% early withdrawal penalty for victims of domestic abuse. Keep in mind that this distribution is not available in plans that offer Qualified Joint and Survivor Annuities (i.e., accounts that require spousal consent). The period of eligibility includes incidents that occurred within the previous 12 months of the withdrawal request.

The National Domestic Abuse Hotline defines domestic abuse as, “…a pattern of behaviors used by one partner to maintain power and control over another partner in an intimate relationship.”4 This can include physical, emotional, psychological, or economic abuse—generally any action taken by an intimate partner to undermine the victim’s ability to engage in independent thoughts and behaviors.

Individuals experiencing domestic violence can self-certify that they experienced domestic abuse and withdraw the lesser of:

  •  $10,000 (indexed for inflation); or
  • 50% of their vested account balance. 

This amount is applicable to both employer-sponsored plans and individual retirement plans. In addition, withdrawals taken under the domestic abuse exception can be repaid within three years to avoid being taxed in the year of the withdrawal. It is important to note that distributions for domestic abuse are not available in plans that offer qualified joint and survivor annuities.

Short-term relief for personal and family emergencies

According to a recent report by Bankrate, nearly 57% of Americans have less than $1,000 for an unforeseeable emergency. This percentage is even more pronounced among Millennials (ages 27-42) and Generation Z (ages 18-26). Additional disparities exist by gender and household income.5

Effective for employer-sponsored and individual retirement plan years beginning in 2024, SECURE 2.0 allows individuals in employer-sponsored and individual retirement plans to withdraw $1,000 to cover the costs of personal or family emergencies.

  • Individuals can self-certify that they are experiencing an unforeseeable and immediate financial need to avoid the 10% early withdrawal penalty.
  • These distributions are limited to one per calendar year.
  • No other emergency distributions can be taken in the following three years—unless the original distribution is repaid, or future distributions exceed the amount of the previous emergency distribution.

Pension linked (add-on) emergency savings accounts

Corebridge Financial will look to support this provision in 2025. Please note, this provision is only applicable to defined contribution, employer-sponsored plans, like a 401(k) or 403(b). Employers who elect to allow add-on emergency savings accounts can allow certain employees to separate contributions into long-term retirement funds and short-term emergency funds. Effective for plan years beginning in 2024, employees can contribute a maximum of $2,500 in these accounts. Employees can self-certify the existence of an emergency that would allow them to access these funds.

It’s important to note that add-on accounts are not available to all employees. They are limited to employees:

  • with compensation less than $150,000;
  • who do not own more than a 5% interest in the company; and
  • who were not in the top 20% of employees when ranked by compensation.

Another option to fund long-term care

Homemaker services $59,488 
( increase 10.64%)

Home health aide $53,768
(12.5% increase)

Adult day health care $20,280
(5.41% increase)

Assisted living facility $54,000
(4.65% increase)

Semi-private room in a nursing home facility $94,900
(1.96% increase)

Private room in a nursing home facility $108,405
(2.41% increase)

Effective for employer-sponsored plan years beginning in 2026, employees may withdraw the lesser of $2,500 annually (indexed for inflation) or 10% of the vested account balance to pay the premiums for long-term care contracts—without incurring an early withdrawal penalty if they are age 59½. There are certain requirements and documents that participants must submit, as described below.

  • Long-term care premium statement (showing premiums owed) that includes the name and tax identification of the insurance company
  • A statement that the coverage is certified long-term care insurance
  • Proof that the participant is the owner of the policy or the relationship of the covered person to the plan participant (if a spouse, for example)

Strike a balance between long- and short-term needs

Prematurely withdrawing retirement funds is rarely ideal. However, there are some circumstances that warrant focusing on crisis situations, such as the ones described in this article. While we hope that you never need to access retirement funds due to a crisis, it helps to know that these six provisions in SECURE 2.0 no longer penalize you for accessing your retirement savings during a crisis.

Corebridge Financial: Moving financial futures forward.

As these SECURE 2.0 provisions become effective, plan sponsors will have more flexibility in helping employees achieve personal and financial wellness. For more information about these and other SECURE 2.0 provisions, reach out to your Corebridge representative and visit our online hub. This new online resource breaks down and simplifies relevant provisions of SECURE 2.0. We will continue to update the hub with more relevant and timely content—so please visit often.


1 Source: Primerica and Change Research Fact Sheet, Q4 U.S. Middle-Income Financial Security Monitor, January 2023.

2 Source:, Hospice Costs & End-of-Life Options, Oct. 25, 2021.

3 Source: National Coalition Against Domestic Violence (2020). Domestic violence.

4 Source: National Domestic Violence Hotline, Understand Relationship Abuse.

5 Source:, Bankrate’s 2023 annual emergency savings report.

6 Source:, Long-term care statistics 2022.

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