Sponsors (2)
Official title: To amend the Internal Revenue Code of 1986 to exempt certain retirement plan distributions used to pay qualified fertility treatment expenses from the early withdrawal tax.
Introduced July 16, 2026 by Mike Levin · Last progress July 16, 2026
The bill reduces short‑term cost barriers to fertility care by exempting limited retirement withdrawals from the early‑withdrawal penalty and allowing repayment, but it shifts risk to individual retirement security, adds employer compliance burdens, and may still leave many families underfunded due to the $20,000 annual cap.
People seeking fertility treatment (parents, families, women) can withdraw up to $20,000 per year from retirement accounts for fertility care without paying the 10% early‑withdrawal penalty, lowering immediate out‑of‑pocket costs for fertility services.
Individuals who take fertility-related distributions can repay or roll them over under rules similar to existing disaster/medical rollovers, letting people restore retirement balances if they repay and reducing long‑term harm for those who do so.
Plan administrators are explicitly permitted to offer this distribution option without jeopardizing plan qualification (so long as annual limits are observed), making employers and plan sponsors more likely to implement the benefit.
Individuals who withdraw retirement funds for fertility care and do not repay the distribution will have permanently lower retirement savings and potentially reduced retirement income, shifting long‑term financial risk onto those families (and potentially public programs if retirement shortfalls emerge).
The $20,000 per‑year cap may not cover the true cost of many fertility treatments, leaving many families with substantial remaining out‑of‑pocket expenses despite the penalty relief.
Employers and plan administrators will face added administrative complexity and compliance costs to implement, verify eligible fertility expenses, and track annual limits, which could be burdensome for small employers and health systems.
Based on analysis of 2 sections of legislative text.
Creates a new exception to the 10% early retirement withdrawal penalty for qualified distributions used to pay eligible fertility-treatment expenses, subject to a $20,000 annual limit (indexed after 2026).
Creates a new exception to the 10% early-withdrawal penalty for qualified distributions from most employer and individual retirement plans when the money is used to pay eligible fertility-treatment expenses. It defines eligible expenses, limits the annual amount that can be treated as a qualified fertility treatment distribution, and sets rules for timing, rollovers, and plan administration. The change applies to distributions made after December 31, 2025, and is written to avoid causing plan qualification failures so long as aggregate employer-plan distributions stay within the statutory limit; the annual dollar limit is indexed for inflation after 2026.