Remember these withdrawals would still be subject to ordinary income tax – we are solely avoiding the 10% penalty on early withdrawals (before 59 ½) with these exceptions. Beginning in 2023, individuals with a terminal illness will be able to withdraw funds from their retirement plans or IRAs without penalty and there is no limit to this exception. In 2024, victims of domestic abuse would be able to withdraw up to $10,000 from their retirement plan or IRAs penalty free. Starting in 2026, individuals subject to long term care would be able to withdraw up to $2,500 penalty free from their retirement plan but not IRAs.
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