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What kind of annuity is a QLAC?

A QLAC is a deferred income annuity (DIA).

A deferred income annuity is an annuity whose payments will begin in the future.  To purchase a QLAC, a QLAC investor normally makes a lump sum payment from their IRA to purchase the QLAC from the issuing insurance company. In exchange for the lump sum payment to the insurance company, the issuing insurance company agrees to make guaranteed payments to the purchaser in a specified amount, beginning at a specified future date, for as long as the beneficiary (or beneficiaries) are alive.  In this way, a QLAC purchaser can guarantee him or herself a future income today.  Making QLAC purchase therefore provides a QLAC owner with knowledge of what his or her yearly, quarterly or even monthly income will be in the future. This income can start at any future date of the purchaser's choosing  so long it is, by IRS rules, on or before the purchaser's 85th birthday.

Ron Ryan

Ron Ryan is the author of this solution

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Updated on Fri, 08 Mar 2019

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