Qualified longevity annuity contracts (QLAC) are deferred income annuities that allow individuals to use a portion of the money in their qualified retirement plans to pay for their purchase. By being able to allocate some of the money in a qualified plan to a QLAC, a person may be able to extend the maximum age when required minimum distributions (RMD) must begin.
Pushing back the date that the RMD must begin has the effect of postponing any tax liabilities that you may incur. You may also owe less to Uncle Sam by being in a lower tax bracket when money is ultimately withdrawn. Best of all, by creating a longer period of time between the issue date and the payout date, your can receive a higher monthly income.
Up until July 2014, anyone with a 401(k) or IRA qualified plan had to start taking a payout no later than age 70.5. In July, new federal regulations created the QLAC, which allows withdrawals to start as late as age 85.
We are Living Longer
Living to 85 used to be unusual, but today it is a quite common occurrence. According to the 2010 U.S. Census, the number of Americans age 85 or older totaled 5.5 million. The oldest segment of the population is projected to reach 19 million by the year 2050. Today there are roughly 70,000 Americans who can call themselves centenarians. By 2050, the number of people who will be at least 100 years old is expected to approach 1 million.
Living to 90 or 100 is a definite possibility for people in good health. If you do manage to exceed your life expectancy (currently about 80 years old), you do not want to outlive your money. A QLAC IRA or a 401(k). Deferred Income Annuity can be a smart way of receiving a guaranteed income stream for as long as you may live.
Unleash the Potential of your Retirement Savings
Most of us have the bulk of our investment dollars in retirement accounts. How will you invest the money in your retirement account so you will be able to live the lifestyle you want to live? Over the course of your lifetime, your financial goals and objectives change from growth and accumulation of wealth to capital preservation and income generation. The new legislation that created the IRA and 401(k). Deferred Income Annuity will help you reach those goals.
By taking advantage of the extended maximum payout date, you can receive a higher monthly payout (the annuity payout increases the longer you delay taking payments) and have guaranteed income that you will never outlive. To learn more about the advantages of a QLAC plan, please click on the “Get Annuity Quote” button.