The SECURE 2.0 Act addresses long-term care insurance. What do I need to know about it? Robert 'Bob' Powell answers this question as part of Decoding Retirement's special segment, Ask Bob.
Wells Fargo Head of Advice and Planning Michael Liersch joined Robert 'Bob' Powell on Decoding Retirement to provide his keys to retirement planning.
Robert 'Bob' Powell was also joined by Yahoo Finance's Molly Moorhead to discuss open enrollment season, provide her thoughts on the importance of HSAs, and much more.
Question:
The Secure 2.0 legislation has a number of provisions, one of which addresses something I’m interested in buying – long-term care insurance. What do I need to know about it?
Answer:
Richard Kaplan at the University of Illinois College of Law recently helped me answer this reader’s question. The big change is this: Retirement plan distributions used to pay for long-term care insurance are exempt from the 10% penalty that applies to “early” distributions, i.e., distributions prior to attaining age 59½. People over 59 ½ could already take out money without penalties, so it’s a bit of a curious provision, according to Kaplan.
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While this penalty relief is certainly worth something, the distributions used to pay for long-term care insurance remain subject to federal income tax and possibly to state income tax as well, depending on the tax laws of the individual states.
If you've got questions about money or retirement, email us at AskBob@yahoofinance.com.
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Yahoo Finance's Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds.
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Editor's note: This post was written by Zach Faulds.
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