Did you know you can delay income from a QLAC (Qualified Longevity Annuity Contract) until age 85? For example, if a 72-year-old moves $210,000 into a QLAC before year-end, next year's required minimum distribution (RMD) could drop by about $7,900, potentially lowering federal taxes by around $1,700. This works because the amount transferred into the QLAC is excluded from the IRA balance used to calculate future RMDs. This strategy is especially worth considering for retirees with extra IRA funds, additional liquid savings, a family history of longevity, and enough taxable income that reducing RMDs could help manage Medicare premium thresholds. Of course, it’s important to weigh the tradeoffs: funds in a QLAC are generally locked until payments begin, cannot be reallocated, and each future payment will be taxed. On the positive side, current long-term yields may offer strong deferred-income options. If you’re thinking about how to protect and preserve your wealth for the long term, it’s worth comparing guaranteed lifetime payouts, death benefits, and income timing to see what fits your goals. Education and tailored strategies are key to making informed financial decisions for your future and legacy.
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