IRS issues Q&As on new qualified long-term care distributions

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The IRS recently issued its first guidance (Notice 2026-33 (PDF - 197.88KB)), in the form of 22 Q&As, on the new qualified long-term care (QLTC) distributions that can be made from certain tax-favored defined contribution retirement plans, including 401(k), 403(b) and 457(b) plans.

The new QLTC distributions can be made to fund the premiums for certified long-term care insurance for employees and their spouses. The new distributions were added by the SECURE 2.0 Act of 2022, which added new Sections 72(t)(2)(N), 401(a)(39) and 6050Z (among others) to implement them and may be made beginning after Dec. 29, 2025.

QLTC distributions are an optional plan feature — plan sponsors can decide whether they want to offer them under their eligible defined contribution plans. In addition, QLTC distributions are generally taxable to the employees receiving them but are not subject to the additional 10% tax on early distributions before age 591/2.

For purposes of the new distributions, certified long-term care insurance is defined to include the following three types of insurance arrangements:

1. a qualified long-term care insurance contract as defined in Section 7702B(b)
2. coverage of the risk that an insured individual would become a chronically ill individual under a rider or other provision of a life insurance contract that satisfies the requirements of Section 101(g)(3) (determined without regard to subparagraph (D) thereof)
3. coverage of qualified long-term care services under a rider or other provision of an insurance or annuity contract that is treated as a separate contract under Section 7702B(e) and satisfies the requirements of Section 7702B(g)

In addition, all three types of insurance must provide meaningful financial assistance in the event the insured needs home-based or nursing home care.

No distribution from a plan can be treated as a QLTC distribution unless a “long-term care premium statement” with respect to the employee has been filed with the plan by the issuer of the certified long-term care insurance. The owner of the insurance coverage must request, on a calendar year basis, that the issuer send a long-term care premium statement to the defined contribution plan.

To satisfy this requirement, a long-term care premium statement must include the following information:

• name and taxpayer identification number of the issuer
• a statement that the coverage is certified long-term care insurance (as defined in Section 401(a)(39)(C))
• identification of the employee as the owner of the coverage
• identification of the individual covered and the individual’s relationship to the employee
• the premium owed for the coverage for the calendar year
• a statement that the issuer has filed an “Issuer Disclosure” with the IRS with respect to the certified long-term care insurance (discussed further below)

Notice 2026-33 provides that a plan administrator can generally rely on the information provided in a long-term care premium statement in making QLTC distributions.

The QLTC distributions made to an employee during a calendar year cannot exceed the least of the following:

• the amount paid by or assessed to the employee during the calendar year for, or with respect to, certified long-term care insurance for the employee or the employee’s spouse
• an amount equal to 10% of the present value of the vested accrued benefit of the employee under the plan
• $2,500 ($2,600 as adjusted for inflation for 2026)

In addition to the long-term care premium statement that issuers must provide to retirement plan administrators, the new QLTC distribution rules impose a number of other disclosure and reporting requirements on issuers and plan administrators, including the following:

• Issuer disclosure: As noted above, an issuer of certified long-term care insurance must file an Issuer Disclosure with the IRS with respect to the certified long-term care insurance. The Issuer Disclosure must identify the issuer, the type of coverage, and such other information as the IRS may require that is included in the filing of the insurance product with the applicable state authority.
• Form 1099-LPS: Any issuer of certified long-term care insurance that files a long-term care premium statement with a defined contribution retirement plan for a calendar year must make a return to the IRS using Form 1099-LPS (Long-Term Care Premiums Paid Statement), on which the issuer will report the long-term care premiums paid for the calendar year.
• Written statements to employees and spouses: An issuer that is required to file Form 1099-LPS must also furnish a written statement to each individual whose name is required to be included on Form 1099-LPS. Thus, the issuer will be required to furnish a written statement to the employee (and another written statement to the insured if the insured is not the employee).
• Form 1099-R: The plan administrator (or other payor) must report a QLTC distribution to the employee on Form 1099-R (Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.).