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
By deferring income, a QLAC can reduce your
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.

Is a QLAC right for you?
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
FAQS on QLACs
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
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