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  • Writer's pictureSteven J. Rosenthal, CPA, CFP, JD

The Case for Longevity Annuities and QLACs

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Many people in their early retirement years would like to know if they can afford to spend money on frequent trips or luxury vehicles without being concerned about running out of money in their old age. That is where longevity annuities or QLACs may be part of the answer. Longevity annuities are a type of deferred annuity that can be purchased today but will not start paying benefits until later in retirement, usually at age 80 to 85. QLACs or “qualified longevity annuity contracts” are longevity annuities purchased within a 401(k) or IRA account. Both types of annuities have tax benefits, but QLACs can reduce the taxable distributions that would otherwise kick in when a retiree reaches the age where they must take required minimum distributions (RMDs).

The passage of Secure Act 2.0 has expanded the maximum investment that can be placed in a QLAC to $200,000 and has eliminated prior percentage restrictions. Not every corporate retirement plan has the option to purchase a QLAC, but retirement money in a 401(k) plan can always be rolled over to an IRA account that allows this feature. QLACs, like other longevity annuities, are purchased from insurance companies that offer these products as an option within retirement plans. Potential investors should study the terms of the contracts and the stability of the companies as part of their retirement planning analysis.

Retirement planning presents a tradeoff between financial resources that can be prudently consumed today vs. resources saved for the future. While deferred annuities and QLACs are not designed to provide investment returns that will match the stock market, they can relieve the psychological concerns that retirees might have about outliving their money.

Fulcrum Wealth Advisors provides advice regarding whether longevity annuities or QLACs make sense as part of a retirement plan. For more information about longevity annuities or QLACs, please access the following websites.

Investment advisor representative of securities and investment advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a broker/dealer, and Registered Investment Advisor. Cetera is under separate ownership from any other named entity. In addition, some Investment advisory services are offered through Fulcrum Wealth Advisors, LLC. Fulcrum Wealth Advisors, LLC is a registered investment advisor in the State of Washington.

Branch Address: 10940 NE 33rd PL., #210 Bellevue, WA 98004 Branch Phone: 877-400-0260



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