RMD Deferral until age 80?

Submitted by Steven Lea on Mon, 2017-11-20 18:33

A Client came in today and asked about the ability to place $125,000 in some type of special IRA that allows the deferral of initial RMD until age 80? In all my years, and attended Ed’s classes I have never heard of this. I relate to the rollover into a 401(k) when one continues to work until 80, but that is not the fact set here.

thanks.



Submitted by William Tuttle on Mon, 2017-11-20 23:53

The client is probably not referring to a type of IRA, but rather a Qualified Longevity Annuity Contract” (QLAC). The IRS recently allowed QLACs to be purchased within an IRA and defer RMDs just for the QLAC. These are essentially a Deferred Income Annuity (DIA). To be qualified they must meet the following requirements:

  • All QLACs across all retirement accounts must be the lesser of $125K or 25% of all retirement accounts.
  • Payouts must begin by age 85.
  • Must be fixed payouts or optionally with COLAs.
  • Have no cash surrender value other than a return of premium to beneficiaries.

Note: This only defers RMDs on the <= 25% of retirement assets that are in the QLAC. Note2: Just because you can do something does no necessarily mean you should do something.

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