QLAC Owner's Manual

On July 1st, 2014, the Department of the Treasury and the IRS approved the use of a longevity annuity within qualified accounts. That specific type is called a Qualified (or Qualifying) Longevity Annuity Contract, or the acronym QLAC. It’s important to point out that the QLAC is not a new product, because the longevity annuity strategy was actually introduced in 2004. A QLAC is the result of a new IRS ruling of an existing product structure, the longevity annuity aka: Deferred Income Annuity or DIA). The QLAC strategy was primarily passed so that younger workers participating in a 401k (i.e. defined contribution plan) could have the option to invest in a product that guarantees a lifetime income stream that started at a future date. The QLAC ruling also allows a person with a Traditional IRA to defer past the 70 ½ RMD age limitation to a maximum age of 85 to plan for future income as well. My prediction is that, initially, this will represent the majority of QLACs sold because people can potentially lessen taxes on the Required Minimum Distributions (RMDs).