Does your 401(k) allow penalty-free distributions for long-term care premiums?

Participants under age 59½ can take distributions from a 401(k) plan to pay long-term care insurance premiums without an early distribution penalty (the distribution is still taxable). The distribution must be limited to the lowest of the actual premiums, 10% of the vested account balance, or a dollar limit ($2,600 in 2026). But this option only applies if the plan is amended to allow it. The IRS extended the time for amending a plan to allow for qualified long-term care distributions (QLTCDs) until December 31, 2027. If you have a prototype plan from a financial institution, check whether an amendment has or will be made. #IdeaoftheDay