What To Know About Qualified Longevity Annuity Contracts

As the average life expectancy continues to increase there are many Americans that are concerned about outliving their retirement savings.  There is a new type of retirement savings vehicle being promoted to address these concerns that is called a qualified longevity annuity contract (QLAC).  These longevity contracts are a form of pure income protection that have some similarities to the types of protections that term life insurance policies provide for survivors. 

QLAC’s can only be paid out in straight or joint life form and cannot be used to buy a period certain with them for another beneficiary.  At the behest of the Obama administration and the U.S. Treasury the IRS has released a final set of rules in July of 2014.  This column discusses some of the pros and cons of QLACs.  It is a good idea to speak with a professional estate planner to decide if this is the right retirement strategy. 

See Mark P. Cussen, Qualified Longevity Annuity Contracts Explained, Investopedia, October 19, 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.