QLAC Explained: Qualified Longevity Annuity Contract (2026 Guide)
Written & reviewed by Hans Goldstein, EA, Independent Licensed Insurance Producer · CA license 4273294 · NPN 20602398Admitted to practice before the IRS
Independently reviewed 2026-10-03
Short answer
A QLAC (qualified longevity annuity contract) is a deferred income annuity you buy inside an IRA or 401(k). The amount you put in, up to $210,000 per person in 2026 (IRS Notice 2025-67), is left out of your RMD math until the income starts, which must be no later than age 85.
In exchange, that money is locked up and becomes lifetime income, backed by the claims-paying ability of the issuing insurer.
CD vs MYGA, after tax
Data as of October 3, 2026. Primary sources: IRS Publication 590-B.
What $100,000 earns in 5 years: CD vs MYGA, after tax
Rates used: CD 5.00%, the top nationally available 5-year CD (Bankrate, October 14, 2026); change it to the rate you are offered. MYGA 5.95%, the best A-rated rate we track as of October 13, 2026: Delaware Life Pinnacle Plus 5-year (AM Best A-, negative outlook, 7/31/2026), $100,000 and up, effective October 6, 2026 (Delaware Life rate sheet).
| CD, interest taxed every year | $121,081 |
|---|---|
| MYGA, tax-deferred, before tax | $133,507 |
| MYGA after paying tax on all the interest at withdrawal | $126,136 |
| Tax deferral alone adds about | $674 |
| MYGA ahead of the CD, after tax | $5,055 |
Assumes 22% federal and 0% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge.
In an IRA both grow tax-deferred, so the edge there is the rate alone. Bank and credit union deposits are FDIC or NCUA insured up to the limits; a MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.
What a QLAC actually does
- You take $X (up to $210,000 in 2026) of your IRA money
- Buy a QLAC inside the IRA
- RMDs on that QLAC portion of your IRA are SUSPENDED until age 85
- At age 85 (or earlier if you choose), QLAC starts paying you guaranteed income for life
SECURE 2.0 set the dollar limit at $200,000, indexed for inflation, and removed the old rule that also capped a QLAC at 25% of your account balances. The limit is per person across all your IRAs and plans, so a married couple can each buy up to $210,000 in 2026.
| Year | QLAC premium limit per person |
|---|---|
| 2023 | $200,000 (SECURE 2.0) |
| 2024 | $200,000 |
| 2025 | $210,000 |
| 2026 | $210,000 |
Source: IRS Notice 2025-67 (2026 cost-of-living adjustments: the QLAC limit under Treas. Reg. §1.401(a)(9)-6(q)(2)(ii) “remains $210,000”). Checked October 3, 2026.
Why it exists (Congress logic)
Congress wanted to give retirees a tool to hedge against living too long. Without QLAC, retirees were forced to take RMDs at 73 and could exhaust IRA money by 85-90, leaving nothing for late-life expenses. QLAC says: "carve out a portion to guarantee late-life income, defer RMDs on that portion."
QLAC math example
Setup: 70-year-old male, $200K QLAC, defer income to 85. The payout below is an illustration from June 2026, not a quote; QLAC payouts change with interest rates, so get current quotes from several insurers.
| Year | What happens |
|---|---|
| 70 | Buy QLAC inside IRA, $200K transferred to QLAC |
| 73 | Normal RMD on remaining IRA, ZERO RMD on QLAC portion |
| 75-84 | Continue normal RMDs on rest of IRA, QLAC portion still excluded |
| 85 | QLAC starts paying ~$3,800/month for life (~$45,600/year guaranteed) |
| 85+ | Lifetime income for as long as you live |
Total payout if you live to 95: $456,000 from $200K input (228% return over 25 years, ~3.3% annualized + longevity insurance).
If you die before 85: most QLACs offer a "cash refund" rider that returns unused premium to heirs. Conservatively reduces income by ~5-10%.
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Top QLAC carriers (2026)
| Carrier | AM Best | Notes |
|---|---|---|
| Mutual of Omaha | A+ | Standard QLAC features, competitive payout |
| New York Life | A++ | Highest-rated mutual carrier |
| MassMutual | A++ | Strong mutual, conservative pricing |
| Pacific Life | A+ | Innovative QLAC structures |
| AIG / American General | A | Aggressive payout factor |
Video: QLAC Explained in about 90 seconds
1 min 21 sec video. AI narration of this page, accuracy-checked against the review; the tables on this page are the current source. Education, not personal advice.
Video transcript
A QLAC lets you defer required minimum distributions, those RMDs, on up to $200,000 of IRA money until age 85. You can basically think of this as longevity insurance that comes with a really nice tax deferral kicker. How it works is you take up to $200,000 of your IRA money and you use it to buy a QLAC right inside that IRA. Now, thanks to the SECURE Act 2.0 in 2023, this limit is now a flat $200,000, indexed for inflation, replacing the old percentage rules. Let's run through the exact math for a 70-year-old male who defers a $200,000 QLAC to age 85. Okay, so at age 70, you buy the QLAC inside the IRA, transferring that $200,000. Fast forward to age 73 and you start taking your normal RMDs on your remaining IRA balance. But here's the best part. Your RMD on the QLAC portion is a flat zero. And that exclusion continues right on through ages 75 to 84. Then comes age 85, which is where your patience really pays off. At this point, the QLAC starts paying roughly $3,800 a month, or $45,600 a year, guaranteed for life. And please remember, any guarantee is backed by the insurer's claims-paying ability. But, you know, every financial tool has its tradeoffs, and QLACs are certainly no different. First, the contract is irrevocable. Once it's purchased, your income start date is completely locked in. You also take on counterparty risk, since you're relying on the carrier to survive for 15+ years. Keep in mind, too, that there is generally no early access to this money during the deferral period. Finally, there's the very real risk of inflation erosion. $45,600 a year in 2041 will simply buy less than it does today.
QLAC pros
- Defer RMDs on up to $210,000 (2026). Significant tax savings if you're in a high bracket at 73
- Longevity insurance: guaranteed income for life starting at 85 (when most other money may be exhausted)
- Mortality credit: payout factor at 85 is significantly higher than buying at younger age
- Reduces RMD pressure: by carving out a portion, your regular RMDs are smaller
QLAC cons
- Irrevocable: once you buy, the income start date is locked
- Counterparty risk: your QLAC depends on the carrier surviving 15+ years
- No early access: generally can't surrender during deferral period
- Inflation: if you defer income 15 years, $45,600/year in 2041 dollars is worth less than today
Annuities in plain terms
An annuity is an insurance contract. You pay a premium, in one lump sum or over time, and get one of three things back:
- Lifetime income (SPIA: pay once, get a check every month for life)
- Tax-deferred growth with downside protection (FIA: index-linked interest with a cap and a 0% floor)
- A fixed rate for a set term (MYGA: works like a CD, with the tax deferred)
The carrier pays for these out of its bond portfolio and, for FIAs, an option budget that buys the index-linked credit.
Every annuity trades liquidity and growth for certainty. A SPIA gives the most certainty (income for life), but you give up access to the principal. An FIA protects the downside but caps the growth. A MYGA locks the rate but ties up the money for the term.
Quick FAQ
Q: Are annuities ever "good investments"?
A: Yes, when used for what they do well: income certainty, downside protection or a locked rate. They go wrong when sold for something else, like a SPIA pitched for "growth."
Q: What's the difference between immediate and deferred annuities?
A: An immediate annuity (SPIA) starts paying within 12 months of purchase. A deferred annuity grows for years before payments begin.
Q: Who regulates annuities?
A: State insurance commissioners. (RILAs are also FINRA-regulated as securities.)
Q: What's the state guaranty fund limit?
A: Usually $250,000 to $300,000 per owner per carrier, depending on the state. Splitting a large purchase across carriers keeps each piece inside the limit.
Q: How do I compare annuities side-by-side?
A: Compare the carrier's ratings (AM Best, S&P, Moody's, Fitch, Weiss, KBRA composite), the Goldstein Complexity Index, the carrier's renewal-rate record, its service, and how the structure fits what you need the money to do.
Q: When should I get a second opinion?
A: Before you sign any annuity over $50,000. An independent review costs nothing and can save you thousands.
What is the latest age a QLAC can start paying?
Age 85. Under the RMD regulations, QLAC income must begin no later than the first day of the month after your 85th birthday. You can pick an earlier start date when you buy, and some contracts let you move it earlier later, but never past 85. That cap is why a QLAC bought late does little for RMDs: bought at 82, it shields that money for about three years.
Is a QLAC worth it at 71, or at 82?
At 71, it can be: you get up to 14 years of RMD relief on the QLAC portion and the largest deferral credit. At 82, it rarely is for tax reasons alone. Only about three years of RMDs are deferred, and you give up access to the money.
At that age, I compare it with a plain immediate annuity, a QCD if you are charitable, or simply taking the RMD and moving it to a MYGA or Treasury ladder.
From my desk: the QLAC math I run first
As a licensed insurance producer, I run the RMD math before the income quote, because the RMD savings are often smaller than people expect and the real reason to buy is income after 85. Example (IRS Uniform Lifetime Table divisor 26.5 at age 73): a $1,000,000 IRA has a first RMD of about $37,736.
Move $210,000 into a QLAC and the RMD is figured on $790,000, about $29,811, so taxable income drops by roughly $7,925 that year. In a 24% bracket, that is about $1,900 of federal tax deferred, not avoided, because the QLAC income is fully taxable later.
If that sounds thin, it is. A QLAC earns its place as longevity insurance, and when it keeps MAGI under an IRMAA line. For how deferred income is taxed, see annuity taxation (a QLAC inside an IRA is fully taxable when paid), and compare it with holding CDs instead.
Who should buy a QLAC
✅ You're 60-70 with $300K+ in IRA money
✅ You don't need the QLAC portion before 85
✅ You're in a high tax bracket and want to reduce RMD-driven income at 73
✅ You want guaranteed late-life income
✅ You expect to live to 85+ (family history, current health)
Who should NOT buy a QLAC
❌ Your IRA is small (< $300K): QLAC eats too much of your liquidity
❌ Poor health or family history of short lifespan (mortality credit works against you)
❌ You need access to that money during 70-85 (e.g., for LTC costs)
❌ You're worried about high inflation eroding deferred income
QLAC vs traditional SPIA at 65
| Feature | QLAC at 65 (defer to 85) | SPIA at 65 (immediate income) |
|---|---|---|
| Income starts | Age 85 | Immediately |
| Annual payout (per $100K) | ~$22,800 starting at 85 | ~$5,700/year for life |
| RMD treatment | Deferred until 85 | If IRA-funded, payments count toward your RMD |
| Mortality credit | Maximum (15-yr deferral) | Standard (immediate) |
| Best use | Longevity hedge + RMD relief | Income gap (as of June 2026) |
Common QLAC traps
Trap 1: Buying too much
The $210,000 limit (2026) applies regardless of IRA size, and the old 25%-of-balance cap is gone. Modern advice is don't put more than 15-20% of total IRA into QLAC.
Trap 2: Wrong start date
Some QLACs let you choose start age between 78-85. Picking too early = lose mortality credit. Picking too late (85) = max math but no flexibility.
Trap 3: Joint life vs single life
For couples, joint-life QLAC pays less per year but continues to surviving spouse. Single-life QLAC ends at first death (with cash refund option). Choose carefully.
Trap 4: Not coordinating with Social Security
If you defer SS to 70 AND buy a QLAC starting at 85, you might have an "income trough" at 75-85. Plan the income stack.
What to do
QLAC is a niche product but powerful for the right buyer. If you're 60-70 with substantial IRA money + want longevity insurance + want to reduce RMD pressure:
213-414-2808 for a QLAC analysis with quotes from 4 top carriers + integration with your other retirement income (SS, pension, regular IRA). No charge.
About Hans Goldstein: Independent retirement income specialist. CA Life License #4273294. NPN #20602398. Reviews 30+ carriers. Phone: 213-414-2808. Email: [email protected].
Goldstein Complexity Index
Every annuity I review gets a complexity score from 0 to 100. Higher means harder to understand. Complexity is where buyers get hurt: riders they didn't know they were paying for, surrender charges that surprise them, and income "benefit bases" they took for cash. SPIAs and MYGAs score low. Products that stack a bonus, an income rider, an MVA and several crediting options score high.
This product's score: 8/100, Grade A+ (Transparent)
Easy to understand. Few moving parts. The buyer can fully explain the product to a friend after one read of the contract.
Score breakdown
| Dimension | Score (1-10) | What this measures |
|---|---|---|
| Riders | 1/10 | How many riders, optional or built in (income, death benefit, LTC). Each one adds cost and one more thing to understand. |
| Crediting strategies | 1/10 | How many index options (cap, spread, participation rate, step rate, volatility-controlled indices). More choices are harder to follow. |
| Surrender complexity | 1/10 | Length of the surrender period, plus any MVA and bonus recapture. The longer and more layered it is, the harder it is to know what leaving early costs. |
| Benefit-base separation | 1/10 | Whether there is a separate income base ("PIV") that is not cash but looks like it. This causes more buyer confusion than anything else. |
| Bonus structure | 1/10 | A premium bonus with a recapture schedule. The bonus is real, but you can lose part of it if you leave early. |
How to read this
- A+/A (0-40): Easy to understand. A pure accumulation FIA, a MYGA or a SPIA. Little room for mis-selling.
- B (41-60): Read the contract carefully and get a second opinion before signing. Income riders cause most of the confusion.
- C (61-80): Many owners don't fully understand what they bought. Common mis-sells: a bonus presented as cash, a benefit base presented as account value, surrender charges glossed over.
- D (81-100): Get an independent second opinion before signing. The product may still fit you, but the odds you later say "I didn't know it worked that way" are high.
Why it matters: nobody gets sued for selling a complicated product, but buyers regret them all the time. An annuity that wins your money in year one and confuses you for the next 14 is worse than a simpler one you understood from the start. Simple products are easier to check.
Get a second opinion before you sign
Talk to Hans Goldstein, a licensed independent insurance producer.
A fixed indexed annuity ties up your money for 7 to 15 years. Cap rates renew annually and can drop. Income riders have separate benefit bases that aren't cash. Get an independent review before you commit your retirement savings to a multi-year contract.
Send your details. Within one business day you get a written review of your quote, a side-by-side with two alternatives, and a free 15-minute call if you want one.
Weighing this annuity against others? Request a free, independent second opinion on the quote you have before you sign.
Rather talk it through? Or book 15 minutes on Hans’s calendar, or call 213-414-2808.
Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers
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Disclosure
This review is based on the carrier's public product materials and rates as of the date shown above. Annuity rates, caps, participation rates, payout factors, crediting methods, and long-term care benefit structures change often, sometimes monthly. Confirm current figures in the latest carrier disclosure and the contract before you buy. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (CA license 4273294, NPN 20602398) appointed with several A-rated carriers. His appointment with the carrier reviewed here may vary, and this review is not an endorsement. No carrier paid for this review. Always read the actual contract and consult a licensed advisor before purchasing any annuity or long-term care insurance product. Past index performance does not predict future credited interest. Annuities and hybrid life+LTC policies are long-term contracts with surrender charges; they are not suitable for funds you may need before the end of the surrender period. AM Best ratings and tax treatment are subject to change. Tax discussion of IRC §7702B, §1035, and the Pension Protection Act of 2006 reflects law as of 2026 and is subject to change.