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What is a QLAC? Understanding qualified longevity annuity contracts

July 10, 2025
Last revised: July 10, 2025

Discover how a qualified longevity annuity contract (QLAC) can provide guaranteed income in retirement, reduce RMDs and offer tax advantages.
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Key takeaways


  1. A QLAC is a deferred income annuity funded by a qualified retirement account. It provides guaranteed income later in retirement, typically starting between age 73 and 85. 
  2. QLACs can reduce required minimum distributions (RMDs) in your early retirement years, potentially lowering your taxable income. 
  3. In 2025, you can contribute up to $210,000 to a QLAC. 
  4. QLACs can offer tax advantages and guaranteed income, but they also come with limited liquidity and may not include inflation protection unless added. 
  5. A QLAC may be especially helpful if you expect to live a long life, want to manage your tax burden, or seek predictable income in your later retirement years. 

Planning for retirement isn’t just about making it to the finish line, it’s about making sure your money lasts once you’re there. A qualified longevity annuity contract (QLAC) is one option that can help you create a reliable income stream in the later stages of retirement. It’s especially helpful for people who are concerned about outliving their savings and want more control over when and how they take income.

Before deciding if a QLAC is right for you, it helps to understand the basics—how it works, who it’s for and the potential benefits.

What is a QLAC?

A QLAC is a type of deferred income annuity purchased with funds from a qualified retirement account, like a traditional IRA or 401(k). The goal? To provide guaranteed income starting later in retirement, no later than age 85.

By deferring income, a QLAC can reduce your required minimum distributions (RMDs) during your early retirement years, which may lower your taxable income. This can be a valuable strategy if you’re looking to extend your savings and plan ahead with more certainty.

Learn more about the difference between qualified and non-qualified retirement accounts

How does a QLAC work?

You purchase a QLAC using money from a qualified retirement account. In return, you receive guaranteed monthly income payments beginning at a future date you choose—with the first payment starting no later than age 85.

For example, let’s say a 70-year-old retiree has $600,000 in a traditional IRA and establishes a $100,000 QLAC. That $100,000 won’t count toward their RMDs until income payments begin, giving them more control over their taxable income in the short term.

Because QLACs are exempt from RMD calculations until distributions start, they can be a useful tool for managing your overall tax strategy in retirement.

QLAC limits for 2025

The IRS sets limits on how much you can invest in a QLAC. For 2025, that limit is $210,000. These limits may be adjusted annually for inflation, so it’s important to stay current with IRS guidelines or consult a financial advisor.

QLAC pros & cons

Like any financial tool, a QLAC has both advantages and limitations. Here’s a breakdown:

Pros of a QLAC

  • A QLAC provides guaranteed income for life, starting at the age you select—up to age 85. This can create a sense of comfort knowing you’ll have a dependable source of income in your later retirement years. 
  • It helps reduce RMDs during the earlier years of retirement, which can lower your taxable income and help manage your tax burden. 
  • QLACs offer protection from market volatility. Your income payments don’t depend on market performance, and the value of your contract won’t decrease due to market downturns while you wait for payments to begin. 
  • A QLAC can support charitable giving strategies by preserving space to make Qualified Charitable Distributions (QCDs from your IRA. This allows you to give to causes you care about while keeping taxable income in check. 
  • By planning ahead with a QLAC, you can gain more confidence and control over your long-term retirement income, especially if you’re concerned about outliving your assets. 

Cons of a QLAC

  • Money used to purchase a QLAC is no longer liquid. Once you invest, you can’t withdraw the funds or access them in an emergency. 
  • Unless your QLAC includes an optional rider, it likely doesn’t offer inflation protection. This means the purchasing power of your income may decrease over time. 
  • QLACs may not be ideal for those with shorter life expectancy or those who need access to income right away, since payments are deferred until later in retirement. 
Middle aged couple checking finance account together
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A QLAC isn’t for everyone—but it may be worth exploring if you:

  • Are in good health and expect a longer-than-average lifespan 
  • Don’t need all your retirement savings for early retirement income 
  • Want to reduce your taxable income from RMDs 
  • Value the certainty of guaranteed income in later retirement 

Because your financial situation is unique, it’s a good idea to talk with a financial advisor about whether a QLAC aligns with your retirement income plan.

FAQS on QLACs

What types of retirement accounts can be used to buy a QLAC?
You can use funds from most qualified retirement accounts, including traditional IRAs and certain 401(k) plans, to purchase a QLAC. Roth IRAs are excluded.
When do QLAC payments begin?
You can choose a start date anytime up to age 85. The later the start date, the larger the monthly payments will typically be.
How does a QLAC reduce RMDs?
When you use a portion of your retirement savings to purchase a QLAC, that amount is excluded from your RMD calculations until income payments begin. This can lower your taxable income in the early years of retirement and give you more flexibility in managing your withdrawals.
Can a QLAC help with estate planning?
A QLAC can support estate planning by providing a predictable income stream for your later years, which may reduce the need to draw down other assets you intend to pass on. Some QLACs also offer death benefits to a spouse or beneficiary if you pass away before or shortly after payments begin.
What happens to a QLAC if I die early?
If you pass away before your QLAC payments begin, what happens next depends on your contract. If you elected a return-of-premium or survivor benefit, your beneficiary may receive the original investment or a portion of it. Without that option, the funds typically remain with the insurer.

Wondering if a QLAC belongs in your retirement plan?

Start by having a conversation with a financial advisor. They can help you:

  • Take a closer look at your retirement savings and future income needs 
  • Understand the potential tax benefits of a QLAC 
  • Compare QLACs with other income options that align with your goals 

Connect with a local advisor to see if a QLAC fits your financial future. With guidance and clarity, you can make wise decisions for your future.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Guarantees based on the financial strength and claims paying ability of the product’s issuer.

Concepts presented are intended for educational purposes. This information should not be considered investment advice or a recommendation of any particular security, strategy, or product.

Holding an annuity inside a tax-qualified plan does not provide any additional tax benefits.

Withdrawals and surrenders will decrease the value of your annuity and, subsequently, the income you receive. Any withdrawals in excess of 10% may be subject to a surrender charge. The taxable portion of each annuity distribution is subject to income taxation. If a taxpayer is younger than 59½ at the time of distribution, a 10% federal tax penalty will apply to the taxable portion of the distribution unless a penalty-tax exception applies.
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