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Qualified Longevity Annuity – QLAC

Qualified Longevity Annuity – QLAC

  • Primary Benefit:
  • Guarantee Future Income

A Qualified Longevity Annuity Contract (QLAC) is a relatively new type of deferred income annuity that was created as a result of a July 1, 2014, U.S. Treasury Department ruling. Please visit our Deferred Income / Longevity Annuities page for a complete description of this type of annuity. The 2014 ruling addressed and solved a problem for many qualified account holders, and makes the purchase of Deferred Income Annuities with tax qualified funds from an IRA or 401k account, a much more attractive option.

Prior to the ruling, if you wanted to purchase a deferred income annuity with tax qualified funds, you were required to start your guaranteed income payments no later than age 70 ½, in order to satisfy IRS mandated Required Minimum Distribution (RMD) rules. But now, if your deferred income annuity meets certain requirements, it is considered a Qualified Longevity Annuity Contract, allowing you to defer the start of your income payments to as late as age 85, while at the same time bypassing the normal required minimum distribution rules on the funds allocated to the QLAC.

Qualified Longevity Annuity Contract (QLAC) Requirements

1) Over your lifetime, you cannot allocate more than 25% of the total of all your IRAs or $125,000, whichever is less, towards the purchase of a QLAC. In future years, the $125,000 limit will be adjusted for inflation.

2) Payments can begin at any age, but must begin no later than age 85.

It’s important to note, that the $125,000 / 25% limit is per person. For example, if one spouse had $600,000 in their IRA, they could allocate up to $125,000 (limit) into a QLAC, and if the other spouse had $350,000 in their IRA, they could allocate up to $87,500 (25%) into a QLAC. All dollar amounts allocated to Qualified Longevity Annuity Contracts completely avoid and are not included when calculating future required minimum distributions (RMDs).

Please visit our Deferred Income / Longevity Annuity Quote page to request more information and get a personalized QLAC quote, custom tailored to your individual needs. Or, if you have further questions, feel free to give us a call at 1-800-239-0356.