Does a QLAC allow RMDs to be deferred?
My client, who turns 70-1/2 this year (2016) has been told by her investment advisor that if she invests her entire IRA (approx. $225K) in a Qualified Longevity Annuity Contract (QLAC), that she can defer taking RMDs until she is 85.
1. Is that correct?
2.Are there any other any “hidden” provisions she should consider?
Permalink Submitted by Alan - IRA critic on Thu, 2016-05-12 17:10
The maximum QLAC permitted is the lesser of 125,000 or 25% of the IRA balance at the end of the prior year. That would be 56,250 in this case unless client has other IRA accounts. The permitted QLAC is issued in a separate IRA account and that account is not subject to RMDs until around age 85 per the contract requirements.