It’s Tax Time…Do You Need A QLAC In Your IRA?

The Annuity Man

Qualified Longevity Annuity Contracts (QLACs) are the "tax baby" of all annuity types.  The IRS and the Treasury Department introduced QLACs in 2014 to be used in qualified accounts like Traditional IRAs and specific employer retirement plans.

For 2020, the maximum premium funding rules for QLACs is the lesser of 25% of your total qualified assets or $135,000.  If you and your spouse/partner each have a Traditional IRA, then each of you can own a Qualified Longevity Annuity Contract (QLAC).  QLAC income can be turned on as soon as age 72 and as late as age 85.  QLAC dollar amounts are not used to calculate your RMDs (Required Minimum Distributions), which can potentially lower the taxes on your RMDs.

QLAC income is a combination of return of principal plus interest, and the annuity company is on the hook to pay regardless of how long you live.  It's a true transfer of risk strategy that contractually solves for longevity risk, which is the fear of outliving your money.  QLACs also help solve for inflation by having income start at a later date.  You can also ladder the QLAC premium to have income starting at different intervals.  The bottom line is that QLAC quotes are customizable and commodities.  Never forget that, and always shop all carriers.

Contact Stan The Annuity Man for the best and highest Qualified Longevity Annuity Contracts (QLACs) quotes with the best carriers using Stan's proprietary annuity calculators.  You can also receive Stan's QLAC Owner's Manual for free and under no obligation, and see a live feed of the best fixed rates for your specific state of residence.


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