QLAC Calculator
Calculate a Qualified Longevity Annuity Contract (QLAC) purchase from your IRA or 401(k): defer up to $210,000 (2026 limit) of pre-tax balance from required minimum distributions, then start guaranteed income at any age from 70 to 85.
What Is a QLAC?
A Qualified Longevity Annuity Contract (QLAC) is a deferred income annuity purchased inside a traditional IRA or 401(k) that exempts the purchase amount from Required Minimum Distribution (RMD) calculations until income begins. Income can start any time from age 72 to age 85, with most retirees choosing 80-85 to maximize the deferral benefit. Per IRS RMD guidance, the QLAC amount comes out of the IRA balance for RMD calculations the year of purchase and stays excluded until annuity income begins. The 2026 maximum QLAC purchase is $210,000 per person (indexed annually under SECURE 2.0, up from $200,000 in 2025) — and unlike the pre-SECURE 2.0 rules, there is no longer a 25% of IRA balance cap. The previous "25% rule" was eliminated by SECURE 2.0 Section 202, making QLACs accessible to retirees with smaller IRA balances who couldn't previously meet the 25% threshold.
Three Reasons to Buy a QLAC
(1) Longevity insurance: guaranteed income for life regardless of how long you live or what markets do. A 65-year-old who buys a $200K QLAC with income starting at 85 receives roughly $40,000-$55,000 per year for life from a single-life contract — about 20-27% per year of original purchase, because most buyers die before collecting. (2) RMD deferral: $210K out of a $700K IRA reduces your RMD by 30% from age 73 onwards. If your marginal tax bracket is 24%, that's roughly $2,000-$4,000 annual tax savings during the deferral years. (3) Behavioral simplification: knowing you have guaranteed income starting at 85 lets you spend more confidently from the rest of your portfolio in your 70s without fearing running out of money. Source: Kitces QLAC research.
QLAC Downsides — Why Not Everyone Should Buy One
QLACs aren't appropriate for everyone. The downsides: (1) Mortality risk — if you die before income begins (or shortly after starting), single-life QLAC payments stop and the insurance company keeps the remainder. Cash refund and joint-life versions exist but reduce the payout rate by 10-20%. (2) Inflation risk — most QLACs are fixed-dollar; an inflation-adjusted QLAC reduces starting income by 30-40% in exchange for CPI-linked future increases. (3) Credit risk — payouts depend on the insurance company's solvency for 20+ years. State guaranty associations cover roughly $100-$300K per insurer per state, so spreading large QLACs across multiple insurers is wise. (4) Opportunity cost — money in a QLAC can't be invested in stocks, real estate, or other assets that might grow faster. QLAC works best as a 10-25% slice of total retirement assets, not the centerpiece.
SECURE 2.0 QLAC Changes — What Changed in 2024
The SECURE 2.0 Act (passed December 2022, mostly effective 2024) made four major QLAC improvements: (1) raised the dollar limit from $145,000 to $200,000 (now $210,000 for 2026), (2) removed the 25% of IRA balance cap, opening QLACs to smaller savers, (3) permits spousal QLACs with continuation at the same level (previously capped at 50% survivor), and (4) allows free-look refunds within 90 days of purchase for buyer remorse. These changes made QLACs significantly more flexible — for example, a 65-year-old with a $400K IRA can now buy a $200K QLAC (50% of balance), whereas under pre-2024 rules they were capped at $100K (25% of balance). Per IRS SECURE 2.0 guidance, these changes apply to QLACs purchased on or after January 1, 2024. Last updated May 2026.
QLAC Death Benefits and Joint-Life Options for a Surviving Spouse
A QLAC is not a forfeited premium if you die before payments begin. Contracts can be bought with a return-of-premium death benefit, which pays your beneficiary the premium you paid minus any income already received, or as a joint-and-survivor contract that keeps paying your spouse for life after you die. Joint-life and return-of-premium features both lower the monthly income the same premium buys, so compare quotes with and without them before deciding. Only a spouse can be named on a joint-life QLAC; non-spouse beneficiaries receive the death benefit instead of a lifetime income stream. Source: IRS — RMD FAQs. Updated 2026-09-17.
How QLAC Income Is Taxed — and Why a Roth Cannot Hold One
Every dollar a QLAC pays out of a traditional IRA or 401(k) is ordinary income in the year you receive it, taxed at your marginal rate — there is no capital gains treatment and no partial return-of-basis exclusion unless the account held after-tax contributions. That is the trade being made: you defer the RMD, you do not avoid the tax, and income starting at 85 arrives in whatever bracket you occupy then. Roth accounts are a different matter entirely. Because Roth IRAs have no lifetime required minimum distributions, the RMD-deferral benefit that justifies a QLAC does not exist there, and Roth IRA funds cannot be used to purchase one. The planning question is therefore not "should I buy a QLAC" but "which account should it come from" — and the answer is almost always the traditional balance carrying the largest future RMD. RMD rules are published by the IRS at Required Minimum Distributions FAQs. Updated 2026-09-25.
QLAC or Delay Social Security? Compare Them Before You Buy Either
Both purchases buy the same thing — more guaranteed lifetime income that starts later — and for many retirees delaying Social Security is the better buy first. Delayed retirement credits increase the benefit for each year claiming is postponed past full retirement age up to 70, the increase is inflation-adjusted for life, it carries survivor value for a spouse, and it costs nothing in fees or insurer credit risk. A QLAC starts where that runs out: it can defer income past 70, it can be bought in a size you choose, and it removes its purchase amount from RMD calculations, which Social Security cannot do. The sensible order for most people is to bridge to age 70 from the portfolio, take the maximum Social Security, and then size a QLAC against whatever longevity gap remains — not to buy the annuity and claim Social Security early. Updated 2026-09-25.
Frequently Asked Questions
What is a QLAC?
A Qualified Longevity Annuity Contract is a deferred income annuity purchased inside an IRA or 401(k) that defers required minimum distributions on the purchase amount until annuity income begins (anywhere from age 72 to 85). The 2026 maximum purchase is $210,000 per person, indexed annually.
What is the maximum I can put into a QLAC?
For 2026, the maximum QLAC purchase per person is $210,000, up from $200,000 in 2025. SECURE 2.0 (effective 2024) removed the prior 25% of IRA balance cap, so a retiree can put the full $210,000 into a QLAC regardless of total IRA size.
When does QLAC income have to start?
QLAC income must start no later than the first day of the month following the QLAC owner's 85th birthday. Most retirees start income between ages 80 and 85 to maximize deferral and lock in the highest payout rate.
Are QLAC payments taxable?
Yes, fully taxable as ordinary income in the year received, just like regular IRA distributions. QLACs defer taxation but do not eliminate it. The benefit is delaying tax on the QLAC amount from age 73 (RMD start) to age 80-85.
Can I buy a QLAC with Roth IRA money?
No. QLACs are only permitted with traditional (pre-tax) IRA, 401(k), 403(b), or 457(b) assets. Roth IRAs do not have RMDs during the owner's lifetime, so there is no RMD-deferral benefit to put inside a Roth QLAC.
What happens if I die before QLAC income starts?
For single-life QLACs, payments cease and the insurance company keeps the remaining balance. Joint-life QLACs continue payments to the surviving spouse. Cash refund QLACs return the unpaid balance to beneficiaries but at a 10-20% lower payout rate. Choose the structure based on spouse longevity needs and inheritance goals.
How is QLAC income taxed?
As ordinary income in the year you receive it, at your marginal rate, because the money comes from a traditional IRA or 401(k). There is no capital gains treatment. A QLAC defers the RMD, it does not reduce the eventual tax rate on the money.
Can I buy a QLAC inside a Roth IRA?
No. Roth IRAs have no lifetime required minimum distributions, so the RMD-deferral benefit a QLAC exists to provide does not apply, and Roth IRA funds cannot be used to purchase one. QLACs are funded from traditional IRA or eligible employer plan balances.