The Truth about Qualified Longevity Annuity Contracts (QLACs)

The Annuity Man

Qualified Longevity Annuity Contracts (QLACs) were introduced in 2014 by the Treasury Department and the IRS.  The current 2020 funding rule is the lesser of 25% of your total Traditional IRA assets or $135,000. 

QLAC lifetime income guarantees can be deferred as far out as age 85, or can be started as soon as age 72.  You can add your spouse or partner as a "Joint Life" participant in the lifetime income stream guarantee even though it's your IRA, and each of you can have a Qualified Longevity Annuity Contract within your Traditional IRAs.

The dollar amount used in a Qualified Longevity Annuity Contract (QLAC) is not used to determine your RMDs (Required Minimum Distributions) when you turn 72, which can potentially lower your taxes on those RMDs.

Many 401k type retirement plans are now adding QLACs to their investment choices so participants can plan for future income needs.

I have found that most people structure their QLAC payments "Life with Cash Refund" or "Joint Life with Cash Refund" to make sure that 100% of the money goes to someone in their family.  The annuity company is still on the hook to pay the income stream regardless of how long you live, but any unused money goes lump sum to the listed beneficiaries of the policy.

You can contact Stan The Annuity Man if you have any questions or want to see specific Qualified Longevity Annuity Contract (QLAC) quotes or other annuity type quotes for your specific situation...or to view a live feed of the best MYGA fixed rates for your state of residence.


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