Can I Buy a QLAC Direct?

Don't be afraid to take the pilots seat! Search for a QLAC at
Don't be afraid to take the pilots seat! Search for a QLAC at Photo by: ZeroCreatives / Cultura / Getty Images

COAUTHORED by Jim Farrish

What Is the Lowdown on QLACs?

The bill signed by Congress in 2014 allows for qualified money (IRA, 401k, TSA, etc.) to be used in a longevity annuity (QLAC) and is substantial for individuals and couples. Why? The short version is it allows individuals to defer 25% or a maximum of $125,000 of qualified money, between age 70 ½ and 85, without having to take a required minimum distribution during that period on that money.

QLACs Provide Participants Planning Features

There are possible tax benefits. There is the ability to defer up to $125,000 without the tax burden of mandatory distributions during the deferral period if it goes beyond the 70 ½ requirement of the IRS. The deferral allows the money to stay in the contract and defer for a potentially higher income amount upon distribution and saves you the income tax on required distributions on the held funds under the IRS rules.

This annuity gives participants the ability to plan for future income needs at later ages than previously available. It is also possible to use the planned income to offset potentially increasing expenses due to healthcare needs and/or offset inflation of living expenses.

QLAC Drawbacks

The liquidity of the money contributed to the QLAC is an aspect you need to understand. You are deferring to a specific point in time and putting the burden on the annuity company to guarantee the income for life, so there is no liquidity in the contract.

This guarantees the annuity company the money in order to provide you guaranteed income later.

If death occurs prior to the first income payments, does the QLAC have premium protection, or does the annuity company keep the money? Thankfully, certain contracts will allow for the return of premium to your heirs should you die prior to the income start date.

The future income payments would reduce to offset this benefit provided by the annuity company, but it does give you the option to choose.

Investigate a QLAC Quote on Your Own by Visiting

The best way to evaluate a QLAC is to run a quote for your specific scenario. Historically, the only way to do this was through an agent, or attempting to deal directly with an annuity company. The latter is almost impossible to accomplish. Thanks to websites like you now have an online source to run your own live quotes and play the “what if” game to determine if the benefits of a QLAC work for you. Once you determine the parameters for your situation you can run a final quote which will supply the names of the annuity companies able to provide you with a QLAC based on your specifications. Try if for yourself. It’s worth the education.

Even Financial Products Like Annuities Fit into the Direct to Consumer Model

Consumers are adopting the direct model. Take Amazon for example… they are the largest direct to consumer model created. It took time for the consumer to trust the direct model, but now it seems everyone goes to to buy something. Annuities are no different in that consumers want to learn more about the guarantees on income, principal and interest rates that QLAC’s provide… now they can do so direct.

Learn whether a QLAC Can Benefit You

QLACs can be a valuable tool for planning future income needs and for providing tax deferral until you need the benefits of your IRA money. What better way to determine if a QLAC works for you than to learn the simple facts of how one works and then run your own quotes based on your needs? The best part of all?… you can do it all hassle free.