When does the withdrawal penalty exception start?

The 10% early withdrawal penalty will apply to qualified distributions after December 29, 2022, for those with a terminal illness.

The Secretary of the Treasury published guidance in IRS Notice 2024-2 which explains that governmental 457(b) plans may not make distributions eligible for the terminal illness penalty waiver. The Notice also provides details of the certification required from a doctor which must be provided to the plan in order to receive the penalty waiver.