
QLACs
Customizing Your QLAC
There are many features you can add to your QLAC so it best fits your needs. We’ve broken down the options you can select to customize your QLAC.
The QLAC is like a pension you can buy for yourself from an insurance company using your pre-tax retirement savings, generating a guaranteed income that lasts as long as you do. Because of its special designation, income from QLACs can start later than 72, reducing the RMDs and associated taxes. It’s a great way to diversify your portfolio, and make sure that all, or most, of your basic retirement expenses will be covered for as long as you live.
They may seem like regular longevity annuities, but they differ in a few key ways. The main distinction is that it’s purchased with pre-tax funds (from an IRA or 401(k)) but isn’t subject to the standard required minimum distribution (RMD) rules.
Traditional RMDs force you to withdraw your money (and therefore pay taxes on your savings) by age 72. However, with a QLAC, you can wait as late as 85 to start withdrawing the portion of your tax deferred savings that you’ve used to purchase the QLAC. This means you can be prepared for a longer time horizon.
This comes with a few rules, which we’ll walk you through:
You have to buy an annuity as a QLAC in order to qualify for the tax deferral. Other annuities you buy, such as a longevity annuity bought with pre-tax savings, cannot be reclassified as a QLAC later.
QLACs also have a limited number of extra features, unlike some other longevity annuities. For example, it can’t have any features related to the market except an adjustment for inflation.
QLAC premiums are limited to the lesser of $135,000 or 25% of the money in your traditional IRA account, per person on the annuity contract. This means that if you’re buying a QLAC for you and your spouse, then you can have up to $270,000 worth of QLACs.
You can only contribute to a QLAC with money saved in pre-tax accounts, such as traditional IRAs (not Roth) and 401(k), 403(b), and 457(b) plans.
You cannot contribute to a QLAC with money saved in Roth IRA accounts or pension plans.
The biggest benefit of a QLAC is that you can defer being taxed on your retirement savings until age 85. Because QLACs are exempt from required minimum distributions till 85, the longer you defer receiving income from your QLAC, the greater your benefit.
At Blueprint Income, we offer QLACs from more than 15 top rated insurance companies. Click below to get real-time personalized quotes.
From there, you’ll get access to our annuity guides and team of specialists to help you analyze your retirement finances and walk you through the application process.
There are many features you can add to your QLAC so it best fits your needs. We’ve broken down the options you can select to customize your QLAC.
QLACs have many financial benefits which make retirement planning simpler. But, it’s important that you know all they have to offer to determine if it’s right for you.
A QLAC offers you a guaranteed income stream to give you peace of mind during retirement. We’ve created this quick checklist so you can know if a longevity annuity is a good fit for you.