Qualified Longevity Annuity Contract (QLAC) as a Long-Term Care Strategy

Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning

A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity that is funded from an Individual Retirement Account (IRA) or qualified retirement plan and is eligible for special treatment under the Internal Revenue Code if it meets certain requirements.

Normally, you must begin taking Required Minimum Distributions (RMDs) from your IRA or qualified retirement plans at age 70.5. Under the QLAC rules, you can place a portion of your IRA into a QLAC and income can be deferred up to age 85. Meaning that rather than being forced to take RMDs on those funds beginning at age 70.5, you don’t have to take distributions on those funds and incur taxes on them until you start receiving income from the QLAC which can begin as late as age 85. As of 2019, you can put up to 25% or no more than $130,000 into a QLAC.

While this is not a true “long-term care” tool, it can be incorporated into an overall long-term care plan to defer some income to a later age when you may be more likely to be incurring long-term care expenses.  If you pass away, the remaining cash value in the QLAC is paid as a death benefit to your beneficiaries. 

We Can Help You Develop a Long-Term Care Plan

Having assisted many Wake County clients with long-term care planning, our team at Carolina Family Estate Planning understands that developing a long-term care plan is about not just protecting your own independence and dignity, but also protecting those you love from the physical, emotional, and financial toll that caring for a loved one can take.

We’ve helped many clients take an interdisciplinary approach to their long-term care planning by exploring both legal and financial options. Usually, a well-rounded long-term care plan will involve a combination of legal, health care, and financial tools to meet your goals and maximize your protection. To get started, register an upcoming seminar to learn more or call our office at 919-443-3035.

 

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