Annuity type
Qualified Longevity Annuity Contract (QLAC)
A DIA bought inside an IRA or 401(k) with a special tax status: the money it holds is excused from RMDs until income begins (as late as 85).
- Principal
- No account value during deferral
- Liquidity
- None — irreversible
- Backed by
- State guaranty association, within limits
The decoder
What the quoted number means
Deferred payout rate + an RMD deferral
A QLAC's quoted payout works exactly like a DIA's — payment ÷ premium, mostly principal return, contingent on living. Its real feature is regulatory: funds moved into a QLAC (up to the federal cap — $210,000 for 2026, indexed annually) are excluded from required-minimum-distribution math until payments start, which can be as late as age 85. It is a tax-timing tool wearing an annuity costume.
Federal rules let IRA and 401(k) money buy a deferred income annuity without the deferred balance counting toward RMD calculations — deferring both the income and the tax on it, to as late as 85. The trade is the same as any DIA: the money is locked, and life-only forms forfeit value on early death.
QLACs suit people whose RMDs would force out income they do not need at 73. They are a niche, deliberate purchase — the acronym gets searched precisely because the rules are fiddly.
Who it tends to fit: ira holders deferring rmds they don't need.
The honest comparison
QLAC vs. a payment stream
Payment streams can also live inside a self-directed IRA — but they do not carry the QLAC's RMD exclusion; a stream's IRA value counts toward RMD math like any IRA asset. If RMD deferral is the goal, a QLAC does something a stream cannot. If yield on a fixed schedule is the goal, the comparison reverses.
What the secondary market pays right now is on our current estimated yields page; for rate context on this product family, see payment streams in a self-directed ira.
QLAC questions
Can a secondary market annuity be a QLAC?
Other types: SPIA · DIA · MYGA · Fixed deferred · Fixed indexed · RILA · Variable
Pacific Structured Assets
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