Wills, Trusts & Estates Prof Blog

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

Monday, August 7, 2023

A Retirement Tax Break That Ends the Fear of Outliving Your 401(k)

Estate planningStarting this year, Americans can use $200,000 of their retirement accounts to purchase qualified longevity annuity contracts, also known as QLACs. Congress has set a new limit of $145,000 or 25% of your balance, whichever is lower.

Annuities are insurance contracts that individuals can purchase to provide steady income, similar to a pension. QLACs have existed for decades and offer more income for life than a typical immediate annuity. Payments begin at 80 or 85 and come with unique tax benefits. The drawback to QLACs is the upfront cost, and if an emergency occurs before payouts start as those funds are locked in. 

For more information see Ashlea Ebeling “A Retirement Tax Break That Ends the Fear of Outliving Your 401(k)” The Wall Street Journal, July 23, 2023.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.


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