Quick Definition

A Qualified Longevity Annuity Contract (QLAC) is a type of deferred annuity funded with an investment from a qualified retirement plan or IRA that provides a guaranteed income later in life, typically starting after age 85.

Examples

• 1A retiree purchases a QLAC at age 65 with $100,000 from their IRA to secure a steady income stream starting at age 85.
• 2An individual allocates a portion of their 401(k) plan to a QLAC to reduce their required minimum distributions (RMDs) and tax liability during early retirement.
• 3A financial planner advises a client to invest in a QLAC to ensure financial stability in the later stages of retirement, considering the client's longevity risk.

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