Scott Thomas, ChFC®, CAP®, CKA®, RICP®

What is a QLAC? Could This Strategy Work for You?

This a type of deferred income annuity (DIA) allowing a contract holder to purchase future lifetime income with a portion of their qualified account savings (401k, IRA, 403b etc.). The contract holder can exclude the value of that annuity from their annual required minimum distributions (RMD) calculation.

Think of it as carving out up to 25% of IRA value or max $125,000 for an individual and they could elect to defer to any age up to age 85 and not required to include this money in the RMD calculations. This is one way to reduce for a period of time distributions and electing income in the future.

With life expectancies steadily increasing many are living longer into their 80's and 90's and facing longer retirements. Traditional pensions are offered less today than in the past and the need to protect retirement assets from market volatility are some of the reasons for QLAC.

Be sure to get clarity on what happens when you die. Both before the payments start and after payments start.

Choose quality carrier and get clear about the timing of future cash flows before investing. QLAC is a retirement strategy and not a product. Similarly an IRA is strategy not a product. Talk to a professional about your situation and good idea to discuss this matter with other family members as well. QLAC may be a viable option. Remember this is a fixed conservative approach and the money is not invested into securities such as stocks, bonds, mutual funds or Exchange Traded Funds. This is a fixed annuity strategy and discussing your circumstances with an experienced agent may be your next right step.

Here is video link on QLAC case study I created for you on You tube

Check the background of this financial professional on FINRA's BrokerCheck
Check the background of this financial professional on FINRA's BrokerCheck