Caregiver Financial Relief Act

Overview: This bill waives the 10% tax on early distributions from qualified retirement plans and employer-sponsored savings plan that meet specific tax requirements, if the withdrawal is used to pay expenses for family caregiving.

Caregiver Population: An individual who incurs expenses for providing care for a spouse, relative, in-law, or household member with long-term care needs.

Care Recipient Eligibility Requirements: An individual at least 6 years of age unable to perform at least 2 activities of daily living (ADLs) without significant assistance due to a loss of capacity; or an individual needing supervision to safeguard from health and safety threats due to cognitive impairment; and is unable to perform at least 1 ADL without significant assistance. An individual at least age 2 but not 6 years of age unable to perform at least 2 activities independently (including eating, transferring or mobility.) An individual under the age of 2 needing durable medical equipment or a skilled practitioner if parents or guardians are absent.

Amount of Tax Relief: The 10% tax penalty on early distributions from retirement plans is waived if the amount withdrawn is used exclusively for expenses related to family caregiving expenses.

Income-based Adjustments/ Threshold Amounts: The total amount that may be withdrawn on a penalty-free basis may
not exceed $10,000.