IRA AND QLAC

Hello if i purchase QLAC annuity with IRA money does it directly go to insurance company from custodian? does this reduce my RMD ? Can i do every year? How it can benefit my spouse in event of my passing or my heirs?



If you purchase a QLAC, you would check with the insurance company IRA custodian about opening an IRA annuity account there, and then do a direct trustee transfer from your current IRA for your QLAC purchase. This will reduce your RMD for the years following the QLAC purchase, but not for the year of the purchase. You can make additional QLAC purchases as often as you wish, but as of 2022 your total QLAC purchases cannot exceed 145k, nor can they exceed 25% of your total IRA balance. Therefore, if you purchased a 145k QLAC, you would need an IRA balance of at least 580k at the time of purchase, and you could not add to that 145k until inflation adjustments generated an increase in the 145k limit.
A QLAC can have a return of premium benefit should you pass before receiving your premium back in annuity payments (145k), but that would also reduce your payments, or your QLAC instead might contain a life annuity payment at your death to your surviving spouse. The options are complicated. The following article contains all the details from when QLACs were first authorized.
2014-15524.pdf (govinfo.gov)

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