A QLAC, or Qualified Longevity Annuity Contract, is a type of annuity that is designed to provide income to individuals after they reach a certain age, usually 85 or older.
It allows individuals to put a portion of their retirement savings into an annuity that will provide them with an income stream for the rest of their life.
Funds in a QLAC are exempt from required minimum distribution rules, meaning they can be left to grow tax-deferred while providing income in retirement.
A qualified longevity annuity contract (QLAC) is a deferred annuity funded with an investment from a qualified retirement plan or an individual retirement account (IRA). They are available for purchase through many insurance companies. A QLAC provides guaranteed monthly payments that begin after the specified annuity starting date1.
As a deferred annuity, QLACs provide you with a guaranteed stream of income later in life. The IRS rules stipulate that required minimum distributions begin at age 85 from the QLAC2
Under current rules, an individual can spend 25% or $135,000 (whichever is less) of their retirement savings account or IRA to buy a QLAC. The main benefit of a QLAC is a deferral of taxes that accompanies RMDs1.
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