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QLAC: defer RMDs and guarantee late-life income.

A Qualified Longevity Annuity Contract — known as a QLAC — is one of the few tools the IRS gives retirees to legally postpone Required Minimum Distributions. Bought inside a traditional IRA, a QLAC defers both income and RMDs on up to $200,000 until as late as age 85, then pays a guaranteed lifetime income afterward.

How a QLAC works

  1. You move up to $200,000 from a traditional IRA or 401(k) into a QLAC contract with an insurance carrier.
  2. That money is excluded from your IRA balance for RMD calculation purposes.
  3. The carrier begins paying you a guaranteed lifetime income starting on a date you choose — typically age 80, 82, or 85.
  4. Once income begins, payments are taxable as ordinary income (same as any IRA withdrawal).

Why retirees use QLACs

Pros
  • ✓Reduces RMDs in your 70s, lowering taxable income
  • ✓Guarantees lifetime income starting in late life when other savings may be depleted
  • ✓Up to $200,000 (2024+ limit under SECURE 2.0) can be sheltered
  • ✓Optional return-of-premium death benefit protects heirs
  • ✓Spousal continuation available
Cons
  • ×Money is irrevocably committed — no surrender value
  • ×No market upside — fixed payout only
  • ×Inflation can erode purchasing power over 15–20 years of deferral
  • ×Death before income start (without ROP) means loss of principal

QLAC payout example

For a 65-year-old male depositing $200,000 with income starting at age 85, today's competitive QLAC quotes generate roughly $60,000–$75,000 per year in guaranteed lifetime income — substantially more than the same $200,000 would produce starting income at 65, because of the 20 years of deferral plus mortality credits.

Who should consider a QLAC

  • Retirees with sizable traditional IRA balances who don't need RMD income at 73.
  • Pre-retirees worried about outliving savings (longevity insurance).
  • Anyone in good health with a family history of longevity.
  • People in higher tax brackets at 73 who'd prefer to defer income.

Who should not

  • Retirees who need IRA income now or in the near term.
  • People in poor health or with a short life expectancy.
  • Anyone uncomfortable locking up principal irrevocably.

Related reading: how annuities affect your RMDs.

Frequently asked questions

What is a QLAC?
A Qualified Longevity Annuity Contract (QLAC) is a special type of deferred income annuity purchased inside a traditional IRA or qualified retirement plan. It lets you defer income — and the corresponding Required Minimum Distributions (RMDs) — on the amount used to purchase the QLAC until as late as age 85.
How much can I put into a QLAC?
Under the SECURE 2.0 Act, the QLAC contribution limit was raised to $200,000 per individual (adjusted for inflation). The previous 25%-of-IRA-balance cap was eliminated.
When does QLAC income start?
You choose the income start date when you buy the contract, but it cannot be later than the first day of the month following your 85th birthday. Common start ages are 80, 82, and 85.
Does a QLAC reduce RMDs?
Yes. The amount inside the QLAC is excluded from the IRA balance used to calculate Required Minimum Distributions until income starts. This is the primary tax benefit and reason most people buy a QLAC.
What happens if I die before QLAC income begins?
QLACs can include a return-of-premium death benefit. If you die before the income start date, your beneficiaries receive the unused premium. You can also elect a joint-life option that continues payments to a surviving spouse.

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