QLAC.
In plain English
A QLAC, short for Qualified Longevity Annuity Contract, is a special kind of deferred income annuity you can buy using money inside a 401(k) or traditional IRA. You hand an insurance company a lump sum now, and in return it promises a guaranteed monthly check that starts at a future date you pick, no later than age 85. Its main job is longevity insurance: protecting you from the risk of living so long that you outlast your savings. The money used to buy a QLAC is also temporarily excluded from required minimum distribution calculations, but there is a federal dollar cap on how much you can put in, and that cap is set by law and adjusted for inflation over time.
01Why it matters
If your biggest fear is living to 95 with an empty account, a QLAC turns part of your savings into a paycheck that cannot run out, and it can lower the forced withdrawals you face in your 70s.
02The math, step by step
A 70-year-old moves part of a traditional IRA into a QLAC and elects payments to begin at age 85. For 2026, the most you can put into a QLAC is $210,000 per person (per IRS Notice 2025-67), a figure the IRS adjusts for inflation. That premium is left out of the RMD calculation until payments begin, which can reduce taxable withdrawals in the meantime.
03What this is NOT
A QLAC does not start paying right away. You buy it now but income begins years later, up to age 85. An immediate annuity starts payments almost at once. A QLAC is built specifically to cover the late-life years, not your first year of retirement.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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