Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, February 11, 2012

Proposed Regulation for QLACs

IRAProposed regulation 115809-11 would allow IRA participants in 403(b), eligible governmental 457 plans, and IRAs other than Roth IRAs and defined benefit plans to purchase contracts for annuities that begin at an advanced age. The proposed regulation would allow participants to purchase these contracts, named “qualifying longevity annuity contracts (QLACs), with a certain portion of their account balances. The portions used would not be calculated as required minimum distributions from the IRAs.

Participants would be required to begin taking distributions no later than the month following their 85th birthday. QLAC premiums would be limited to the lesser of $100,000 or 25% of the participant’s account balance at the payment date. If the premium exceeds these limits, the contract is not longer a QLAC. QLAC death benefits are also limited, and the proposed rules include a reporting requirement to the participant.

For more information on QLACs, see Sally P. Schreiber, Journal of Accountancy, Prop. Regs Would Ease Required Minimum Distribution Rules for Older Retirees Who Purchase Certain Annuities, Journal of Accountancy, Feb. 2, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


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