qlac & ira
I desire a QLAC, but the company that I am with presently with are not offering a QLAC. I have not yet taken my RMD for this year from my annuity. I believe that I can transfer my present annuity to another company and the balance in my present annuity to a qualified QLAC. The question is do I have to take RMD from my present annuity for this year or can I transfer to the QLAC and not take the RMD for this year
Permalink Submitted by Alan - IRA critic on Mon, 2015-09-21 18:11
You have to take the 2015 RMD based on the 12/31/2014 balance of all your TIRA accounts. If you transfer the permitted QLAC amount to an IRA annuity before year end, then the premium will not be included in your 2015 year end balance and will reduce your RMDs until such time as the QLAC is required to start distributions. I agree that this is not clearly stated in the QLAC Regs, but those Regs refer to existing rules with respect to IRA transfers so QLAC balances are treated consistently with other transfers.
Permalink Submitted by Gene Silvis on Tue, 2015-09-22 13:59
I have a 69 year old client, he has a small IRA ($70,000)and a large 401K (over $500,000). Can the IRA and $55,000 from the 401K be rolled into a QLAC?
Permalink Submitted by Alan - IRA critic on Tue, 2015-09-22 20:34
Yes. The account balance and the QLAC premiums referred to in the QLAC Regs refer to the aggregate account balances of all eligible plans and QLAC premiums. Therefore if the proposed QLAC is an IRA annuity, the 25% percentage limit can be applied to the 401k and IRA balances including the QLAC premiums. And the 125k limit is also aggregated over both these plans.
Permalink Submitted by Alan - IRA critic on Wed, 2015-09-23 23:45
Here is latest from Michael Kitces on the IRA QLAC decision: https://www.kitces.com/blog/why-a-qlac-in-an-ira-is-a-terrible-way-to-defer-the-required-minimum-distribution-rmd-obligation/