QLAC Rules 2026: How to Use a Qualified Longevity Annuity Contract to Reduce IRA Required Minimum Distributions

A qualified longevity annuity contract (QLAC) is a fixed deferred income annuity purchased inside a traditional IRA, 401(k), or other qualified plan. The premium you pay — up to $210,000 in 2026 — is excluded from the account balance used to calculate required minimum distributions until annuity payments begin, which you can defer as late as age 85. For retirees with large pretax balances who don't need every RMD dollar as current spending income, a QLAC reduces taxable distributions now and provides guaranteed income against longevity risk later.

How a QLAC works

When you purchase a QLAC, you direct part of your IRA or qualified plan balance to an insurance company that issues a fixed deferred income annuity contract. The IRS excludes the premium from your account balance when computing your annual RMD. This reduces the taxable distribution required each year until payments begin.

On the income start date you selected at purchase — anywhere from age 72 to 85 — the annuity begins paying guaranteed monthly income for life. Those payments are taxed as ordinary income when received, exactly like a normal IRA distribution. The strategy is primarily valuable when:

• Your IRA generates larger RMDs than you need for current spending, pushing income into higher brackets or triggering Medicare IRMAA surcharges.
• You have longevity concerns — a guaranteed income floor that continues into your 90s is meaningful insurance against outliving your portfolio.
• You prefer a no-tax-cost RMD reduction strategy (versus a Roth conversion, which is taxable in the conversion year).

QLAC eligibility

Eligible source accounts

You can fund a QLAC from:²

• Traditional IRA (including rollover IRA)
• SEP IRA and SIMPLE IRA (SIMPLE IRA after the 2-year restriction window)
• Employer plan: 401(k), 403(b), or governmental 457(b)

You cannot fund a QLAC from a Roth IRA or Roth 401(k). Those accounts have no RMD requirement during the owner's lifetime, so there is no RMD to reduce.

Dollar limit

The maximum total QLAC premium across all your IRAs and qualified plans is $210,000 for 2026. This is a per-person aggregate limit, not a per-account limit. You may split the premium across multiple accounts (e.g., $150,000 from IRA A and $60,000 from IRA B), but the total may not exceed $210,000. Your spouse has a separate $210,000 limit based on their own accounts.

Contract requirements — what makes a contract QLAC-compliant

Not every deferred income annuity qualifies. Under Treas. Reg. § 1.401(a)(9)-6(q), the contract must:²

• Provide fixed payments only. Variable annuities and fixed-indexed annuities do not qualify as QLACs. Payments must be fixed in dollar amount or increase at a specified constant percentage rate.
• Begin income by age 85. You must select an income start date no later than the first day of the month after you turn 85. Earlier start dates are permitted. Most purchasers select age 85 to maximize the RMD deferral window.
• Be irrevocable with no cash surrender value. Once purchased, the contract cannot be surrendered for a lump sum. This is the main liquidity trade-off.
• Be designated as a QLAC in writing. The insurer must identify the contract as a QLAC and maintain required records.

A return-of-premium (ROP) rider is permitted — if you die before income begins, the rider returns the premium to your beneficiary. A joint-and-survivor option that continues income to your spouse is also permitted and does not void QLAC status. Adding either rider does not disqualify the contract under the final 2024 RMD regulations.

RMD reduction: the numbers

The RMD calculation is straightforward: (prior December 31 account balance) ÷ (IRS Uniform Lifetime Table divisor for your age). Buying a QLAC subtracts the premium from the balance used in that division every year until payments begin.

Example: You are 73 with a $1,200,000 traditional IRA. You purchase a $210,000 QLAC with income starting at age 85.

• Without QLAC: $1,200,000 ÷ 26.5 = $45,283 RMD
• With QLAC: $990,000 ÷ 26.5 = $37,358 RMD
• Annual RMD reduction at 73: $7,925
• Estimated tax savings at 22%: ~$1,744/year  |  at 32%: ~$2,536/year

Because the ULT divisor shrinks as you age, the annual RMD reduction grows each year. On a static $210,000 QLAC over the 12 years from age 73 to 84, the cumulative RMD reduction is approximately $119,000 in deferred income. In practice the benefit is larger, because the additional IRA assets not distributed continue to compound.

Interactive QLAC RMD Reduction Calculator

Enter your IRA balance and QLAC premium to see annual RMD savings through age 84, the last year before QLAC income begins at age 85.

Assumes a static account balance for illustration. In practice, the IRA balance changes each year from investment returns and distributions, so actual RMD savings will differ. The QLAC premium grows at the insurer's guaranteed rate inside the annuity contract, separate from IRA growth shown here.

QLAC vs. Roth conversion: which reduces RMDs more effectively?

Both strategies reduce future required distributions from your traditional IRA. The right answer depends on your time horizon, tax situation, and liquidity needs.

The strategies are not mutually exclusive. A common coordinated approach: Roth conversions in the pre-RMD years (the gap between retirement and age 73 or 75) to reduce the IRA balance, then a QLAC purchase for the remaining pretax balance. This combination maximizes RMD flexibility while adding a longevity income floor. A fee-only advisor can model both strategies against your specific income sources, IRMAA tiers, and estate goals.

4 common QLAC mistakes

1. Exceeding the $210,000 per-person aggregate limit. The limit applies to all your QLACs combined across every IRA and qualified plan. If you have two IRAs and purchase $150,000 in one and $100,000 in the other, the $100,000 contract is partially disqualified — the excess portion loses its RMD exclusion. The insurance company should enforce this at purchase, but you are responsible for tracking across accounts.
2. Buying a QLAC inside a Roth IRA. Roth IRAs have no lifetime RMD, so there is no RMD to reduce. A fixed annuity inside a Roth also surrenders the tax-free growth and withdrawal flexibility that make Roth accounts valuable. QLACs belong in traditional pretax accounts.
3. Confusing a QLAC with a fixed-indexed annuity. Fixed-indexed annuities (FIAs) are popular products but they do not meet the QLAC fixed-payment requirement. An annuity dealer presenting a FIA as a "QLAC" or "QLAC-equivalent" is either mistaken or misrepresenting the product. Only contracts with fixed (or fixed-escalating) payments qualify under Treas. Reg. § 1.401(a)(9)-6(q).
4. Ignoring the IRMAA interaction. For many retirees in the $100K–$200K income range, the primary financial value of a QLAC is not the federal bracket savings but the Medicare Part B IRMAA avoidance. A $7,925 annual RMD reduction is modest in isolation, but keeping modified adjusted gross income below the 2026 Tier 1 threshold ($109,000 single / $218,000 MFJ) saves an additional $972/year per beneficiary in Part B premiums — nearly doubling the effective annual benefit for a married couple straddling that threshold.⁴

1. IRS Notice 2025-67 — 2026 Retirement Plan Limits (IRS Newsroom) — QLAC premium limit for 2026 confirmed at $210,000 under Treas. Reg. § 1.401(a)(9)-6(q)(2)(ii); same as 2025. Base limit was raised from $125,000 to $200,000 by SECURE 2.0 § 202, indexed for inflation annually.
2. Federal Register — Required Minimum Distributions (July 19, 2024) — Final IRS regulations implementing SECURE 2.0 RMD rules, including Treas. Reg. § 1.401(a)(9)-6(q) governing QLAC contract requirements: fixed-payment requirement, age-85 income-start deadline, no cash surrender value, return-of-premium rider permissibility, and QDRO divorce rules. Effective for distribution calendar years beginning January 1, 2025.
3. IRS Publication 590-B — Distributions from Individual Retirement Arrangements (IRAs) — Uniform Lifetime Table divisors (T.D. 9930, effective 2022) used for RMD calculations, including interaction with QLAC RMD exclusion. Age 73 divisor: 26.5; Age 84 divisor: 16.8.
4. CMS — 2026 Medicare Parts A & B Premiums and Deductibles — 2026 IRMAA Tier 1 threshold: $109,000 single / $218,000 MFJ (based on 2024 MAGI). Tier 1 surcharge: $81.20/month per beneficiary ($974.40/year). Published November 2025.

QLAC limit ($210,000) verified June 2026 against IRS Notice 2025-67. Contract requirements verified against Treas. Reg. § 1.401(a)(9)-6(q) per Federal Register final regulations (July 19, 2024). IRS Uniform Lifetime Table divisors from IRS Pub. 590-B (T.D. 9930, effective 2022). Calculator outputs are estimates; consult a tax professional for your specific situation.