Unlocking Financial Security: The Power of Qualified Longevity Annuity Contracts (QLACs)

What is a Qualified Longevity Annuity Contract (QLAC)?

A Qualified Longevity Annuity Contract(QLAC) is a type of deferred annuity funded with money from a qualified retirement plan, such as a 401(k) or an IRA. It's designed to provide a guaranteed stream of income later in life, helping to ensure that you don't outlive your retirement savings. 

Top 5 Reasons to Consider a QLAC

1. Guaranteed Income  

QLACs provide a steady, predictable income stream for life, offering financial clarity.   

2. Tax Deferral

Funds used to purchase a QLAC are exempt from required minimum distribution (RMD) rules until payments begin.  

3. Protection Against Longevity Risk 

QLACs help mitigate the risk of outliving your savings. 

4. Flexibility in Start Date 

You can choose when to start receiving payments, typically between 65 and 85.  

5. Simplicity   

Once set up, QLACs require minimal management, making them easy to maintain.   

Drawbacks of QLACs

1. Limited Investment Options   

QLACs typically offer fixed returns, which may be lower compared to other investment options.  

2. Irrevocability

Once purchased, QLACs cannot be easily modified or canceled. 

3. Upfront Costs  

There may be fees and charges associated with purchasing a QLAC.  

4. Lack of Liquidity  

Funds used for a QLAC are not easily accessible until the annuity start date.  

5. Inflation Risk   

If QLACs do not include inflation adjustments, purchasing power may decrease over time.  

Have questions or if this may be right for you, give us a call. 

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor 

Since 2012 at Rose Street, Scott has been responsible for helping the firm’s individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun Fact, Scott has a hobby of filling growlers with coins!

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