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QLACs let IRA owners shield up to $210,000 from RMDs until age 85
The SECURE 2.0 changes replaced the prior 25% premium cap with a single $210,000 inflation indexed limit across retirement accounts, with QLAC premiums becoming fully illiquid after funding.
A qualifying longevity annuity contract, or QLAC, allows IRA owners to move up to $210,000 of retirement money so it is not counted in required minimum distribution calculations until they reach age 85, according to Yahoo Finance.
The IRS treatment works by carving the QLAC premium out of the account balance used to compute RMDs during the deferral period, while taxes are still owed later when payments begin.
Under the SECURE 2.0 Act of 2022, the prior rule that limited QLAC premiums to 25% of a retirement balance was replaced with a single $210,000 inflation indexed limit per person across retirement accounts.
The article also notes that once the QLAC is funded, premiums are fully illiquid, and without a return of premium rider, heirs receive nothing if the owner dies before payments start.