What Is a Qualified Longevity Annuity Contract?

A Qualified Longevity Annuity Contract (QLAC) is a type of deferred income annuity you can purchase inside a traditional IRA or 401(k) to provide guaranteed income starting at a future date, typically age 80, 83, or 85. The main tax benefit is that the premium used to purchase the QLAC is excluded from the account balance used to calculate your required minimum distributions (RMDs) each year, allowing you to defer taking that portion of your retirement account until you actually need it for income. Under the SECURE 2.0 Act, the maximum investment in a QLAC from retirement accounts is $200,000. Income from the QLAC is taxed as ordinary income when received, just like any other IRA distribution. QLACs serve as longevity insurance — protection against outliving your savings — while also reducing your current RMD burden during the years between retirement and when the annuity payments begin.