new QLAC rules

Submitted by Brad King on Thu, 2014-07-24 15:43

The August Ed Slott newsletter covers the new Qualifying Longevity Annuity contract(QLAC) rules, but I am still not sure if the rules apply to a Non Spouse Inherited Traditional IRA in the following way. For example, a 60 year person with a 100K Inherited IRA (the person’s only IRA) is currently taking the RMD since it is a Non Spouse Inherited IRA. But can the person invest 25K in a QLAC and have a lower RMD amount in subsequent years?



Submitted by Alan - IRA critic on Thu, 2014-07-24 20:41

No. A QLAC must be purchased by the IRA owner, or by a surviving spouse who rolls over an inherited IRA. The following is copied from the explanation of the IRS QLAC Regs: 

Specifically, the amount of the premiums paid for the contract under an IRA may not exceed an amount equal to 25 percent of the sum of the account balances (as of December 31 of the calendar year before the calendar year in which a premium is paid) of the IRAs (other than Roth IRAs) that an individual holds as the IRA owner.



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