Compliance
Penalty Relief & RMDs: What Retirement Savers Need to Know Post-COVID & SECURE 2.0 Updates
New IRS rules ease penalties for disaster distributions and amend the timeline for required minimum distributions (RMDs) under SECURE 2.0—vital info for anyone with retirement accounts.
By NomadicTax Research Team • 5-8 min read • April 1, 2026
## New Exceptions to the 10% Additional Tax
Under the SECURE 2.0 Act, several exceptions have been added to the **10% early withdrawal penalty** (IRC § 72(t)):
- **Domestic abuse victim distributions**: If you qualify under the rules, you may take a distribution without the 10% penalty. ([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
- **Terminally ill individual distributions**: Once certified by a physician, early withdrawals are exempt from the penalty. ([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
- **Qualified disaster recovery distributions**: Up to $22,000 if disaster rules apply, with specific timeframe requirements. ([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
## Changes to Required Minimum Distributions (RMDs)
SECURE 2.0 also modified **when RMDs must begin** under § 401(a)(9):
- For those turning age 73 between **January 1, 2023 and December 31, 2032**, the RMD age is **73**.
- For those reaching 74 after December 31, 2032, age 75 will apply. ([irs.gov](https://www.irs.gov/irb/2026-06_IRB?utm_source=openai))
- These rules apply to IRAs, 401(k)s, 403(b)s, and similar plans.
## Practical Strategies for Retirement Savers
- Review your **beneficiary designations**—required minimum distribution rules also affect surviving spouses or alternate beneficiaries.
- If considering early withdrawals (due to abuse or illness), document physician certification properly and track timing.
- For disaster recovery distributions, verify the incident period, qualified disaster area, and eligible loss. Timing is tight.
## Examples
- **Example 1**: Jane, 72 in mid-2024, must begin RMD the later of April 1 following the year she turns 72, or after retirement, per previous rules vs. with new age thresholds under SECURE 2.0.
- **Example 2**: Sam is a victim of domestic abuse and wishes to withdraw from his 401(k) before retirement age—if he satisfies the statutory requirements, he avoids the 10% penalty.
## Key Compliance Tips
1. Speak with your plan administrator to ensure that they’re implementing age changes per SECURE 2.0.
2. For eligible exceptions to penalty, keep **rigorous documentation**—medical certifications, proof of disaster declarations, etc.
3. Account for RMDs in cash flow planning—higher age RMDs likely reduce required annual withdrawal amounts for several years.
**Bottom line**: Recent changes under SECURE 2.0 mean more flexibility for early distributions under specific conditions, along with delayed required withdrawals for many retirement savers. Use the exceptions wisely—and prepare early.