Qualified Longevity Annuity Contracts (QLACs) were first introduced in 2014 by the IRS and the Treasury Department as a way for people to use their Traditional IRAs (and some employer sponsored plans) to plan for future income needs.

The goal was to have people add additional income guarantees to add to their Social Security payments. The premium funding rules for QLACs in 2020 is the lesser of 25% of your total IRA (i.e. qualified) assets or $135,000…whichever is less. If you have a Traditional IRA, and your spouse/partner has a Traditional IRA…each of you can have a QLAC. In addition, each of you can choose to add your spouse/partner as a “Joint Life” payout participant. QLAC income has to start by age 85, but can be turned on as soon as 72.

You can also contractually structure the policy so that 100% of any unused money will go to the listed beneficiaries on the policy at the time of your passing…even though the annuity compan is on the hook to pay regardless of how long you live.

The dollar amount placed in a QLAC is not used to calculate RMDs (Required Minimum Distributions) when you turn 72, and the income stream from the QLAC fully covers the RMD for the dollar amount in the QLAC. Contact Stan The Annuity Man to get the best and highest QLAC quotes with all carriers using Stan’s proprietary annuity calculators. You can also get Stan’s QLAC Owner’s Manual for free and under no obligation, and see a live feed of the best fixed rates for your specific state of residence.

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