Proposed Tax Benefits for Retirement Saving Distributions Used for LTC Insurance
Senator Patrick Toomey (R-PA), has re-introduced the Long-Term Care Affordability Act, legislation that would permit tax-free retirement saving distributions of up to $2,500 per year—indexed for inflation—that are used to purchase long-term care insurance. The arrangements to which the legislation applies would include qualified retirement plans, 403(a) and 403(b) plans, governmental 457(b) plans, and IRAs.
These distributions would also be exempt from the 10 percent early distribution penalty tax. The bill would also create new distribution triggers for employee deferral amounts that have been contributed to 401(k), 403(b), and governmental 457(b) plans.
This bill has been referred to the Senate Committee on Finance