How a Qualified Longevity Annuity Contract QLAC Allows You to Postpone Paying Federal Income Taxes Until After You Reach Age 70

What is a Qualified Longevity Annuity Contract (QLAC)?


When you retire, you want the security of knowing that the money you have saved will last as long as you do. A Qualified Longevity Annuity Contract (QLAC) is a special type of qualified deferred income annuity that guarantees lifetime income, but gives you the option to delay receiving payments until as late as age 85, thus giving you the ability to postpone taking a portion of your required minimum distributions (RMDs) until a later date, and provide income needed later in life.

Is a Qualified Longevity Annuity Contract (QLAC) right for you?

This annuity contract may be right for you if you:

  • 1. Are looking to create a guaranteed income stream in retirement that you can’t outlive and want to contribute the lesser of $125,000 or 25% of all IRA balances per individual.
  • 2. Don’t plan to begin your retirement payments for at least one year but prior to age 85.
  • 3. Want to delay paying taxes on money you do not necessarily need early in retirement.
  • 4. Seek predictable, guaranteed1 income payments that are not tied to the ups and downs of the market.
  • Why choose a QLAC?

    Currently, with traditional IRAs and qualified plans you must begin taking required minimum distributions (RMDs) no later than age 70½. Now with the regulations from the US Treasury, by purchasing a QLAC you can defer the distribution of a portion of your qualified assets beyond age 70 ½, by postponing your RMDs until a later date. An RMD is the annual amount IRA owners must begin taking from their retirement accounts no later than April 1 of the year following the calendar year they reach age 70½.

    Postponing RMDs can be beneficial by:

    • 1. Allowing you to delay paying taxes on money you do not necessarily need in early retirement.
    • 2. Providing income for possible medical expenses arising later in life, typically during a
      person’s 80s.
    • 3. Giving you the potential to leave more assets for a surviving spouse.
    • 4. Assisting in managing your assets to help ensure you have income later in life and throughout retirement.

    What types of Retirement Accounts qualify for a QLAC?

    Traditional IRA’s, Simple IRA’s and SEP IRA’s are eligible to fund a QLAC. However, since the minimum distribution rules do not apply to ROTH IRA’s, ROTH IRA’s are not eligible to fund a QLAC.

    Is there a minimum age at which an individual can purchase a QLAC?

    No. The regulations do not provide any minimum age requirement.

    If you have any questions regarding QLAC’s please call Gregory J. Spadea at < a href="tel:+1-610-521-0604">610-521-0604, of the Law Offices of Spadea & Associates, LLC.

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