Penalty-Free Withdrawals for Domestic Abuse Survivors

Good to Know

Domestic abuse happens far too frequently and more often than is commonly thought. The National Institute of Health warns that:

  • One of every four women “will experience physical violence…by their intimate partner at some point during their lifetime.”
  • The incidence of physical violence against men by their intimate partners is lower but hardly trivial—one of every seven men will be victimized during their lifetime.

Tragically, victims of physical abuse commonly face financial abuse as well. The abuser may control checking, saving, credit card accounts, and more.  This treacherous practice makes it much harder for the victim to escape the abuser—how will the abused pay living expenses if they leave the abuser?  For abuse victims who own accounts in an employer-sponsored retirement plan or IRA, the following penalty-free withdrawals may help:

  • Domestic Abuse,
  • Emergency savings account, and
  • Emergency expense.

Qualifying withdrawals are penalty free for years beginning on or after January 1, 2024, under the Secure 2.0 Act.

Domestic Abuse Withdrawal

Domestic abuse victims are eligible to take penalty-free early distributions of up to $10,000.1  Qualifying is straightforward—participants simply self-certify that they’ve experienced domestic abuse.  Distribution of any tax-deferred income or gains must be included in the participant’s gross federal income but the 10% premature distribution penalty does not apply.  The amount withdrawn can be repaid into the retirement plan over three years. The income tax on the repaid amount is refunded upon repayment of the amount withdrawn.

Emergency Savings Account Withdrawal

Employers may, but are not required to, offer an emergency savings account feature to their non-highly compensated employees.2  The account is linked to the employee’s employer-sponsored qualified retirement plan account. Notable requirements include:

  • Employee contributions—generally limited to $2,500 annually—must be made on a Roth after-tax basis, and
  • Employer matching contributions are required and are also generally limited to $2,500 annually.3

An employee/participant’s withdrawals from the emergency savings account are penalty and income-tax-free.  Participants do not need third-party confirmation of an emergency; the participant simply self-certifies the emergency.

Emergency Expense Withdrawal

A withdrawal of up to $1,000 from an employer-sponsored retirement plan can be taken for personal or family emergency expenses. Emergency expenses are defined as those that are unforeseeable or immediate. Taxpayers can repay the withdrawal over the ensuing three years but no additional emergency expense withdrawals are allowed until repayment occurs.

The Bottom Line

Savvy financial advisors and planners alike tend to discourage pre-retirement distributions from tax-deferred accounts such as employer-sponsored retirement plans and IRAs. Why?  Not only does a client face a potential lack of retirement income when it’s needed most, but income tax may also be due from the distribution.  However, the author respectfully suggests that—in the absence of any other financial resource—the immediate need to fund an escape from a domestic abuser may outweigh traditional financial considerations.



The information presented herein is provided purely for educational purposes and to raise awareness of these issues; it is not meant to provide and should not be used to provide financial advice of any kind—including but not limited to legal, identity theft protection, investment, income tax, risk management, retirement, or estate advice. Additional IRS clarification of these topics is expected in 2024. Consult an experienced, credentialed expert for detailed guidance.

1 Not to exceed 50% of the vested balance in their employer-sponsored retirement plan account or the account balance in an IRA.

2 A non-highly compensated employee owns less than 5% of the employer’s stock and earns less than an annually indexed amount.

3 Employer matching contributions are made to the employee’s qualified plan account, not the emergency savings account.