QLAC

Is anyone aware of QLAC and using longevity annuities. I have heard that someone can put up to 125K of IRA money in a QLAC approved strategy in which the 125K doesn’t get factored into the total IRA assets for RMD’s and that IRA in the QLAC can remain in the longevity annuity until age 85.

Can anyone clarify the QLAC rules and verify that there is validity to being able to defer RMD payments to age 85 by utilizing QLAC.

Thank you,

Curtis



Yes, there are no RMDs on the 125k QLAC premium until the QLAC begins payouts. This means less taxable income until age 85 and then MORE taxable income after 85 once the payouts begin. Here are the IRS QLAC Regs:  https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-15524.pdf

Thank you for your input.  Much appreciated.

There appears to be some unique rules for the new QLAC, is the Slott Report update with them and could you share them with us.  For example, I’m hearing that when purchasing them in an IRA you need to have all the assets in the IRA.  In other words, if you have $250,000 in a 401k and $250,000 in an IRA you can only purchase $62,500 in the IRA not the $125,000 limit.  Is this true?

Yes, the premium limitations are rather confusing since the 125k dollar limit is aggregated with all types of retirement plans, while the 25% percentage limit for an IRA QLAC  is only aggregated with other IRAs. The lesser of the two limits applies. From Slott report of 7/2014:

You will be limited as to how much of your retirement savings you can invest in a QLAC. The limit will be the lesser of $125,000 or 25% of your applicable retirement account assets. The 25% limit will apply on an individual plan basis, except for IRAs, BUT the $125,000 is a cumulative limit for all QLACs in all retirement accounts. For IRAs, the 25% limit will apply to the prior year-end total of all IRAs (not including Roth IRAs).

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