Valuing 1st QLAC when buying 2nd QLAC re: 25% limit
The IRS allows a Traditional IRA to spend up to 25% of the balance# in buying a QLAC.
Balance is value as of 12/31 of the previous year plus contributions minus didtributions & Roth conversions during the current year up to the date of QLAC purchase.
But if an IRA bought a QLAC several years ago (say up to the 25% limit) how is that first QLAC valued when considering a second QLAC purchase years later ?
In calculating the 25% value is the value of QLAC #1 added to the balance calculated above ?
Thank You
Permalink Submitted by Alan - IRA critic on Sat, 2018-12-22 17:01
The 25% limit for the new QLAC is calculated using the value of all owned TIRAs INCLUDING prior QLAC premiums paid. Typically the prior QLACs would be separate IRA contracts showing the premiums paid for those contracts. Then the premium for the earlier QLAC is subtracted to determine the amount of space remaining under the % limit for the new contract. And for purposes of the 125k dollar limit, the available limit for a new QLAC is also reduced by the premium for any prior contracts. Anyone with an IRA over 600k would fall under the dollar limit rather than the % limit.