Qualified—Longevity Annuity Contract (“Q—LAC”)

Recent regulations issued by the Treasury Department (July 2014) have brought about increasing interest in this type of Annuity, and mainly surround how RMDs (Required Minimum Distributions) are dealt with in these contracts if they are purchased inside a tax qualified plan or IRA.

Premiums, up to $125,000 (limited to 25% of the IRA or qualified plans value), paid into a Q—LAC are not included in the calculations of RMDs such that the annuities assets are not required to be distributed at age 70 1/2, but can instead be deferred until age 85.

Key Considerations:

• Are these assets or a portion of them needed now? If so, this would not be a good place to position said assets. If, on the other hand, a portion or all of these assets are not now needed, then (subject to the above limits) a Q—LAC can be used to defer taxable RMDs over many years.
• Will the return on my IRA, while taking distributions, be greater than the income I will get in the future? And what price is put on liquidity/flexibility?

Example:

Say that you have $300,000 in an IRA intended to be used for retirement, with a certain amount of that total sum earmarked for use at age 70 ½, or earlier. Perhaps what is left over and not earmarked for said short or immediate term retirement needs (limited to 25% of the value of the IRA or qualified funds), could then be allocated to a Q—LAC, thus avoiding RMDs for many years (up to Age 85).

We can see that in these circumstances, where one can wait to access a portion of the money in the deferred Q—LAC, that such an acquisition can make sound financial sense.

Under the above considerations, and with proper input from qualified persons, the Q—LAC can deliver a lot of power for the punch!

Please contact us for additional information:

League Financial & Insurance Services
1·800·482·5347 / Info@LeagueFinancial.com

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