As you approach the age when the IRS requires you to start withdrawing money from your IRA or 401(k), many clients discover they don't need that money yet and that withdrawing it only creates an additional tax they'd rather postpone. The Qualified Longevity Annuity Contract, or QLAC, is a tool designed for exactly that problem: it lets you set aside a portion of your retirement account, exclude it from your required minimum distribution calculation for several years, and convert it into guaranteed lifetime income that starts whenever you decide, up to age 85. This guide explains how that mechanism works, how much you can contribute in 2026, and how it differs from other annuities we've already covered on the site.
What a QLAC is
A QLAC is a particular type of deferred income annuity that federal law recognizes specially: when you buy a QLAC with money from a traditional IRA, a 401(k), or another qualified retirement account, that amount is excluded from the balance used to calculate your required minimum distribution, as long as the contract remains deferred. In exchange, you agree that the money stays committed inside that contract until income payments begin, which you schedule for a future date, generally between ages 75 and 85.
It is not a new product competing in the open investment market: it is a category of fixed deferred income annuity, with specific tax rules created by Congress, first in 2014 and later expanded by the SECURE 2.0 Act in 2022, specifically to help retirees convert part of their retirement savings into guaranteed income for old age, without the pressure of withdrawing that money before they need it.
How it reduces your IRA or 401(k) RMD
Normally, starting at age 73, the IRS calculates your required minimum distribution by dividing each qualified retirement account's total balance as of December 31 of the prior year by a life-expectancy factor. The higher that balance, the higher your RMD, and the entire distribution is taxed as ordinary income in the year you receive it, regardless of whether your investments went up or down.
When you buy a QLAC, that amount comes out of the balance used for that calculation. If, for example, you have an $800,000 IRA and put $150,000 into a QLAC, your RMD on that IRA from that point forward is calculated only on the remaining $650,000, which reduces the required distribution — and the tax you pay on it — every year until the QLAC starts paying. The practical result is more control over how much taxable income you generate in the early years of your retirement, when you may still have other income sources and prefer to stay in a lower tax bracket.
If you want to first review how your regular RMD is calculated, at what age it starts, and what penalties apply if you don't withdraw it on time, you can see our IRA required minimum distributions (RMD) guide, which explains those general rules in detail before considering a QLAC.
2026 contribution limit
Before the SECURE 2.0 Act, a QLAC's limit was the lesser of $125,000 or 25% of your retirement account balance, which greatly limited its usefulness for larger accounts. Since 2023, that 25% cap disappeared and the limit is a fixed dollar amount, adjusted for inflation each year. For 2026, that limit is $210,000 per person, cumulative across every QLAC you buy, regardless of how many IRAs or 401(k) plans the money comes from.
If you're married, each spouse has their own individual limit on their own retirement accounts: a married couple can, combined, set aside up to double that amount between the two of them. Since this limit updates every year, we always confirm the current figure at the time we design your strategy, to make sure we use the maximum allowed without exceeding the cap.
Availability, cost, benefits, and eligibility vary by person, product, contract, and insurance company, as well as by your service area. Guarantees are subject to the claims-paying ability of the issuing insurance company. Karla Arámburo is not affiliated with or endorsed by Medicare or the federal government.
How deferred lifetime income payments work
When you buy the QLAC, you choose a payment start date that can be deferred up to the first day of the month following your 85th birthday. The longer you defer the start, the higher the monthly payment you'll receive, because the insurer has more time for the money to build value internally and because, statistically, fewer people survive to more advanced ages, which allows for larger payments to those who do. Once payments begin, they continue on a guaranteed basis for the rest of your life, no matter how long you live or how the markets perform.
This structure functions as insurance against longevity risk: it protects specifically against the possibility of living more years than your other savings were designed to cover, guaranteeing a base income for those final years that tend to be the hardest to plan for with certainty.
QLAC pros and cons
Among the advantages are the reduction of your RMD and its associated tax during the deferral years, guaranteed lifetime income that doesn't depend on the market, and the ability to add protection for your spouse or beneficiary if you die before payments begin. It also helps simplify income planning in the later years of retirement, when you may prefer fewer active investment decisions.
Among the disadvantages is the lack of liquidity: the money stays committed inside the contract until scheduled payments begin, so you shouldn't put money into a QLAC that you might need before that date. It also doesn't participate in market growth while deferred, and if you choose the option without return-of-premium protection, there's a risk of losing the contract's value if you die before receiving payments. That's why a QLAC should represent only a portion of your retirement strategy, not the entirety of your savings.
How it compares with other annuities we've already covered
A QLAC is not the same as a traditional fixed accumulation annuity or a fixed indexed annuity: those give you an interest rate or index-linked growth while the money accumulates, and you can generally start withdrawing or converting to income on a more flexible date. A QLAC, by contrast, is specifically designed to defer income until an advanced age and to capture the tax benefit of RMD exclusion, with contribution and start-date rules that other annuities don't have.
If you want to review how a traditional fixed annuity with a guaranteed rate works, or a fixed indexed annuity with index-linked principal protection, to decide whether either of those fits better alongside your QLAC, you can see our fixed annuities guide and our fixed indexed annuities guide.
How it fits your retirement strategy and how I help you decide
A QLAC tends to fit as one piece within a broader retirement strategy, specifically designed to solve two goals at once: reducing your RMD tax burden in the early retirement years and guaranteeing base income for your more advanced years. It works best when you already have your short- and medium-term liquidity needs covered with other accounts, and when you're looking to simplify income planning for the final stage of your retirement.
As an independent, bilingual insurance agent licensed to serve families across Southern California, I review your retirement account balances with you, calculate how much you could contribute to a QLAC within the current limit, and clearly explain the beneficiary protection options, in Spanish or English, without performance promises and without individualized tax or investment advice that would require a license different from mine.
You can call or text (619) 321-8733 to schedule a free, no-pressure conversation and review together whether a QLAC fits your retirement plan. This page is general education, not individualized tax, legal, or investment advice.
Frequently asked questions
What exactly is a QLAC?
A QLAC (Qualified Longevity Annuity Contract) is a specific type of deferred income annuity purchased with money from a qualified retirement account, such as a traditional IRA or a 401(k), that the law allows you to exclude from your required minimum distribution (RMD) calculation until payments begin, which you can defer up to age 85.
How much can I contribute to a QLAC in 2026?
The federal limit for 2026 is $210,000 per person, adjusted annually for inflation since the SECURE 2.0 Act removed the old 25%-of-account-balance cap. This limit applies cumulatively across all your QLACs, regardless of how many retirement accounts the money comes from. Always confirm the current figure with your agent or the IRS before contributing, since the amount is updated every year.
How late can I defer payments?
The law requires QLAC payments to begin no later than the first day of the month following your 85th birthday. You can choose an earlier start date if you prefer, but you cannot defer payments beyond that age limit.
Does QLAC money still count toward my RMD while it's deferred?
No. As long as the value remains inside the QLAC contract and has not started paying income, that amount is entirely excluded from the balance used to calculate your annual RMD on your other retirement accounts. Once the QLAC starts paying, those payments do count as taxable income, but they are no longer calculated as part of a separate account's RMD.
What happens to the QLAC money if I die before receiving payments?
It depends on the options you choose when purchasing the contract. You can add a return-of-premium protection or a benefit for your spouse or beneficiary, generally in exchange for a lower future monthly payment. Without those protections, the risk is losing the contract's value if you die before payments begin, so reviewing these options carefully is essential before purchasing.
Does a QLAC have the same fees as a variable annuity?
No. A QLAC is a deferred income annuity, not a variable annuity: it does not invest your money in subaccounts or charge year-over-year mortality and expense fees. Most QLACs carry no ongoing annual fees; the main cost is the loss of liquidity on the capital you contributed, since you generally cannot withdraw it before the scheduled payments begin.
Can I have a QLAC and still use the rest of my IRA normally?
Yes. The QLAC is purchased with a portion of your IRA or 401(k), up to the allowed limit, while the rest of the account continues operating as usual: it remains invested, continues generating annual RMDs under the normal rules, and you can still withdraw from that portion whenever you need to.