Generally, amounts withdrawn from an individual retirement account before age 59-1/2 are subject to an additional 10% tax, unless an exception applies (such as a distribution in a case of financial hardship). With the recent passage of the Setting Every Community Up for Retirement Enhancement Act (SECURE) a new exception has been added. Starting in 2020, a plan distribution up to $5,000 may be penalty-free, if it’s used to pay costs related to a birth or adoption. The limit applies on an individual basis, so for a married couple, each spouse may qualify for a penalty-free $5,000 distribution. Contact us with questions to learn more about this and other changes brought by the SECURE Act.