Anybody know about QLAC?

[Texas Proud]

So one of my sisters calls me and asks me if she should get a QLAC... I said I do not know what one is...


Seems it is a way to defer RMD to 85 since you put the money into the contract....


I said that to me the word annuity meant it was probably bad, but said I would put is here to get some info and look at it on the web for her....

What is a Qualified Longevity Annuity Contract (QLAC)

A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity funded with an investment from a qualified retirement plan or IRA.




https://www.investopedia.com/terms/q/qualified-longevity-annuity-contract-qlac.asp

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[RobLJ]

I've considered it but will wait for sure until DW hits 59.5 and we can withdraw from her IRAs.
It theoretically could help solve two issues: 1) annuity income and 2) postponing RMDs since the annuity is considered to count towards the account's RMD.
(Anyone can correct me on #2, since I'm not an expert and don't claim to be).
Downside is that not many are offered & therefore not many options, although the costs didn't seem to bad when I looked a year or two ago. It's basically a deferred annuity.



Again, I'm not interested until 5 years from now; then I'll take another look; if interest rates are up (doubtful), I'll take a long look. I'm not even sure whether I have the option within my 403b Brokerage option right now.

 

[OldShooter]

Hmm ... not hampered by any actual information but I like the idea of kicking the RMD can forward.

Hopefully @pb4uski will be along soon to enlighten us. I think he used to be in the annuity/insurance business.

 

[RobLJ]

To be clear, the amount used to fund the QLAC and its annuity payment satisfies the RMD for that portion of the 401k/403b.
You would still have to withdraw the RMD for the remaining portion not used for the QLAC.
Allegedly.

I'll wait on pb4uski also, since I only spent a few hours looking--and it was a year ago.

 

[pb4uski]

I don't know much about them. But I trust this guy's view: https://www.kitces.com/blog/why-a-q...required-minimum-distribution-rmd-obligation/

 

[Independent]

I don't know much about them. But I trust this guy's view: https://www.kitces.com/blog/why-a-q...required-minimum-distribution-rmd-obligation/

+1

This makes sense to me. Don't buy a QLAC just to defer RMDs, but, it might make sense for other reasons.

 

[Souschef]

I was pitched one, and after reading an article about it, the bottom line was, if you are lucky, you get back your initial investment at age 85.
Run, do not walk, the other way!

 

[Texas Proud]

I don't know much about them. But I trust this guy's view: https://www.kitces.com/blog/why-a-q...required-minimum-distribution-rmd-obligation/

Thanks for the article.... have read the executive summary and then set the article to my sister so she can also read.


I think it was someone talking to her DH that prompted this... they have never made a lot of money but did OK... however, both will get pensions and both will get SS and when I did a quick look at their future they were shocked that they will be making more when they retire than they ever made when working.... so her DH is looking to save tax money...


I told sis that the tax money was going to be paid by someone... either them or their kids... do not do something just to save tax in a single year as it might make you pay more taxes in the future...


They are looking to convert from tIRA to ROTH... sis did put her contribution last year in the ROTH so that is good...

 

[OldShooter]

I don't know much about them. But I trust this guy's view: https://www.kitces.com/blog/why-a-q...required-minimum-distribution-rmd-obligation/

Thanks. I think the title of the article tells me all I need to know. Yet another investment product designed to enrich the seller.

 

[JoeyWildcat]

QLAC

Did a sample quote to see the rates, 71 yrs old $80,000 deposit with income starting at age 82. It was nice to see the comparison to RMD on the graph.[mod edit]

 

[target2019]

Nice first post, Joey. Pretty graphic, too.

 

[REWahoo]

Nice first post, Joey. Pretty graphic, too.

Not to mention spammy.

 

[Texas Proud]

Did a sample quote to see the rates, 71 yrs old $80,000 deposit with income starting at age 82. It was nice to see the comparison to RMD on the graph.

But that does not address the total portfolio... yes, income is much higher, but also taxes are also...


The fees etc. seem quite high... I think I can manage my money better....