Now New Parents Can Withdraw From Retirement Plans To Pay For A Baby!

Shawn Plummer

CEO, The Annuity Expert

With the new SECURE Act, new parents can withdraw from their 401(k) or IRA without an early penalty to help pay for expenses regarding their children.

Qualified Birth or Adoption Distribution

The provision is called the Qualified Birth or Adoption Distribution (SEC. 113) which allows up to $5,000 from eligible retirement plans to be distributed penalty-free from either individual retirement account (IRA) or a 401(k) plan within one year from the child’s date of birth or the date on which the adoption of an individual under age 18 is finalized.

Any adoption of a child with physical or mental disabilities is also eligible for any age.  

The $5,000 early withdrawal will be exempt from the 10% penalty tax but will be taxed.

New parents have had to withdrawn money after January 1, 2020, to be eligible for the exemption and after birth or after the adoption is finalized, not before.

Those who qualify can pay down any expenses previously paid.

The Qualified Birth or Adoption Distribution’s eligibility requirement is a qualifying event only which means the $5,000 you can withdraw doesn’t have to be spent on qualifying expenses.

This means you can spend $5,000 on whatever you want. You have to spend it after the birth or adoption.

Another point is that the $5,000 withdrawal on an individual basis means a couple can withdraw up to $10,000 penalty-free.

The new provision applies to each birth or adoption too.


For example:

  • Married Couple has 1st child: Up to $10,000 ($5k from each parent).
  • Married couple has 2nd child:  Up to $10,000 again.
  • And so on and on.


  • Birth of a child
  • Adoption of a child
  • Adoption of a child with physical or mental disabilities.

Eligible Retirement Plans

WARNING *: Defined Benefit Plans are not eligible for the Qualified Birth or Adoption Distribution.

Finally, the new provision is totally optional.

Tip* Whether you take money or not, this is a good time to purchase a life insurance policy to protect your family. Get a free quote here.

Shawn Plummer

CEO, The Annuity Expert

I’ve sold annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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