QLACs and 8606
How does purchasing a QLAC impact the 8606 calculation? Could this be a strategy for isolating after tax money in the IRA for a Roth conversion?
How does purchasing a QLAC impact the 8606 calculation? Could this be a strategy for isolating after tax money in the IRA for a Roth conversion?
Permalink Submitted by Alan - IRA critic on Mon, 2025-09-29 11:33
While a QLAC is excluded from RMDs prior to payout, it is not excluded for IRA basis purposes. The year end value of all IRAs including the QLAC deferred annuity must be entered on line 6 of Form 8606 for purposes of determining the taxable amount of any distribution including conversions and RMDs. The insurance company must provide that year end value, usually in January, therefore someone converting with a QLAC account will have to secure an estimate or would have to use the prior year end value and estimate how that would change for the 12 months that includes the conversion.
Permalink Submitted by Sten Lindquist on Mon, 2025-09-29 12:11
Thank you!