QLACs Shift From Tax Code Theory to Consumer Reality … Soon

Wednesday, July 09, 2014

By Jeffery Levine, IRA Technical Expert  

Follow Me on Twitter: @IRAGuru4EdSlott

In response to my post last week on the IRS announcement of final regulations for Qualifying Longevity Annuity Contracts (QLACs), a number of Slott Report readers inquired about their availability. Here’s what some of them had to say:

“Do you know which companies are currently offering QLACs?”
“I searched the internet for QLACs and couldn’t find one company that has one.”
“I called four companies to inquire about QLACs. Two of them said they don’t have any available and two of them didn’t even know what I was talking about!”

So what’s the deal? Quite simply, the final QLAC regulations that were released by IRS on July 1, 2014 are in effect already – they were effective beginning the next day, July 2, 2014 – but that doesn’t mean that insurance carriers already have products that conform to the new IRS specifications.

While the final QLAC regulations closely resemble the proposed regulations that were initially released back in February 2012, there are a number of changes insurance carriers will need to and/or want to incorporate into their products before they are actually released and made available for purchase.

That’s why – at least to the best of my knowledge – for now, QLACs exist in theory only.
If you think a QLAC may make sense as part of your plan, though, there is some good news. Over the past few years I’ve spoken with a number of insurance company executives who indicated they had full intentions of offering QLACs once the final regulations were released. Supposedly, some of those companies even began to work on QLAC products based on the proposed regulations which, given their similarity to the final regulations, will likely require only minimal tweaking before being finalized. Plus, many companies already offer products that are substantially similar to QLACs.
Put all of that together, and it’s likely that in the not too distant future QLACs will go from tax code theory to consumer reality.
 

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