Short version: A QLAC is a fixed deferred income annuity you buy inside a traditional IRA or workplace plan. Up to $210,000 in 2026 comes out of the balance used to calculate your required minimum distributions, and the income can start as late as age 85. You give up access to that money permanently in exchange for the tax deferral and the lifetime income guarantee.
What Is a QLAC?
A qualified longevity annuity contract is a deferred income annuity purchased with pre-tax retirement money that meets a specific set of IRS conditions. Meeting those conditions buys you one thing the IRS does not otherwise allow. The premium is removed from the account balance used to compute your required minimum distributions until payments begin.
Everything else about a QLAC is ordinary deferred income annuity mechanics. You hand the insurer a lump sum today, pick a future start date, and the insurer guarantees a payment for the rest of your life. The longer you defer, the larger the eventual payment.
A QLAC must be a fixed contract. Variable annuities, indexed annuities, and any contract carrying a cash surrender value are disqualified by rule, which is why the product looks nearly identical from one carrier to the next.
2026 QLAC Rules and Limits
The QLAC framework dates to 2014 Treasury regulations. The SECURE 2.0 Act of 2022 made the two changes that matter most today. It repealed the old cap that limited QLAC premiums to 25% of your account balance, and it set the dollar limit at $200,000 indexed for inflation.
For 2026 the IRS held the limit at $210,000 per person, unchanged from 2025. Indexing rounds down to the next lowest multiple of $10,000, which is why the figure can sit still for a year.
| Rule | 2026 detail |
|---|---|
| Maximum premium per person | $210,000, indexed for inflation |
| Maximum per married couple | $420,000, if each spouse funds from their own accounts |
| Latest income start date | First day of the month after the 85th birthday |
| Percentage-of-balance cap | None. Repealed by SECURE 2.0 |
| Eligible funding | Traditional IRA, SEP IRA, SIMPLE IRA, 401(k), 403(b), governmental 457(b) |
| Ineligible funding | Roth IRA, Roth 401(k), inherited IRA, defined benefit plan |
| Contract type | Fixed deferred income annuity only |
| Cash surrender value | None permitted |
| Rescission window | Up to 90 days after purchase, if the contract offers it |
That last row is newer than most QLAC articles reflect. Final regulations published in July 2024 added an exception letting a QLAC give you the right to rescind the contract within 90 days of purchase without disqualifying it. Not every carrier includes the provision, so ask before you sign.
How a QLAC Reduces Your RMDs
Required minimum distributions currently begin at age 73, rising to 75 in 2033. The IRS calculates your RMD by dividing your prior year-end balance by a life expectancy factor. Money sitting in a QLAC is not part of that balance.
Here is the arithmetic on a $1,000,000 traditional IRA at age 73, where the Uniform Lifetime Table factor is 26.5.
| No QLAC | With a $210,000 QLAC | |
|---|---|---|
| Balance used for the RMD | $1,000,000 | $790,000 |
| Life expectancy factor at 73 | 26.5 | 26.5 |
| First-year RMD | $37,736 | $29,811 |
| Taxable income deferred | n/a | $7,925 |
That roughly $7,900 of deferred income repeats every year until the QLAC turns on. For a household sitting near an income-related Medicare surcharge threshold or the top of a tax bracket, the compounding effect over a decade is the real prize.
The deferral is not forgiveness. When the QLAC begins paying, every dollar is taxed as ordinary income, and the payments are usually larger than the RMDs they replaced. A QLAC moves taxable income later and concentrates it, which helps some households and hurts others. Run the projection before you buy, not after.
Which Accounts Can Fund a QLAC
Pre-tax retirement money qualifies. Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, and governmental 457(b) plans can all fund a QLAC, subject to whether your plan administrator permits it.
Roth accounts cannot. A Roth IRA has no required minimum distributions during the owner’s lifetime, so there is nothing for a QLAC to defer, and the rules exclude Roth money outright. Inherited IRAs and defined benefit plans are also excluded.
The $210,000 cap is a per-person lifetime limit measured across every eligible account you own, not a per-account limit. If you fund a QLAC below the cap, you can add premium later up to the then-current limit.
What a QLAC Actually Costs You
The tax benefit gets most of the attention. The trade-offs deserve equal weight, because they are permanent.
- The money is gone. A QLAC has no cash surrender value by rule. Outside of a rescission window, you cannot withdraw, borrow against it, or unwind the contract because your circumstances changed.
- Inflation erodes a level payment. A payment fixed at purchase and starting fifteen years later buys meaningfully less. Cost-of-living riders exist but lower the starting payment.
- You are betting on longevity. Die at 80 with income scheduled to start at 85 and a life-only contract pays your heirs nothing. A return-of-premium death benefit fixes that and costs you income.
- The guarantee is only as good as the insurer. A QLAC is a promise stretching decades. Carrier financial strength matters more here than on almost any other annuity, which is one reason how annuity guarantees are backed is worth understanding before you commit.
Death Benefits and What Happens If You Die Early
QLAC death benefits are constrained by the same rules that create the tax advantage, but you do have choices. Return of premium pays your beneficiaries the difference between what you paid in and what you received, which protects the estate at the cost of a lower payment.
A joint and survivor structure continues income to a spouse for their lifetime. Life-only maximizes the payment and stops at your death. What happens next depends entirely on which structure you selected at purchase, so treat it as a decision rather than a default. Our guide to what happens to an annuity when you die covers how each option pays out.
Who Should Buy a QLAC
QLACs solve a narrow problem well and a broad problem poorly. They fit best in these situations.
- Large pre-tax balance, RMDs you do not need. If your required distributions will exceed your spending and push you into a higher bracket, deferring a slice is genuinely valuable.
- Real longevity risk. Good health and family history past 90 make the mortality math work in your favor.
- Income you want to backstop late. A QLAC covers the years a drawdown plan is most likely to fail, which is different from the job a single premium immediate annuity does starting now.
They fit poorly if your retirement assets are modest, if liquidity matters more than tax timing, or if leaving a legacy ranks above maximizing your own income. If most of your savings is already in a Roth, a QLAC has nothing to defer.
How to Buy a QLAC
- Confirm the account qualifies and, for a workplace plan, that the administrator allows a QLAC purchase.
- Decide the income start date. Every year of additional deferral raises the payment, up to the age 85 ceiling.
- Choose the death benefit before you compare quotes. Life-only and return-of-premium payouts are not comparable figures.
- Compare carriers on the same specification. Same premium, same start date, same death benefit, then look at financial strength ratings.
- Review the contract for the rescission window and any cost-of-living rider before signing.
QLAC payouts move with interest rates and vary meaningfully between carriers for identical contracts, so a single quote tells you very little. Fidelity, as one published illustration, shows a 70-year-old placing $210,000 with income starting at 80 receiving $40,440 a year. Treat any figure like that as a snapshot and price your own.
Compare QLAC Quotes From 90+ Top Annuity Companies
A licensed producer will price your QLAC across our carrier panel on one specification, so the numbers are actually comparable.
Frequently Asked Questions
What is the QLAC limit for 2026?
The maximum QLAC premium is $210,000 per person for 2026, unchanged from 2025. It is a lifetime limit measured across all of your eligible retirement accounts, not a limit per account. A married couple can fund up to $420,000 in total if each spouse buys from their own accounts.
When must QLAC payments begin?
Income must start no later than the first day of the month following your 85th birthday. You can choose any earlier start date at purchase. Deferring longer produces a larger payment because the insurer has fewer expected years to pay.
Can I buy a QLAC with Roth IRA money?
No. Roth IRAs and Roth 401(k) accounts are not eligible funding sources. A Roth IRA has no required minimum distributions during the owner’s lifetime, so there would be nothing for a QLAC to defer. Inherited IRAs and defined benefit plans are also excluded.
Can I cancel a QLAC after I buy it?
Generally no. A QLAC has no cash surrender value by rule and is irrevocable once the contract is in force. Final regulations issued in July 2024 do permit a contract to offer a rescission right within 90 days of purchase, but carriers are not required to include it, so confirm before you sign.
Does a QLAC reduce my required minimum distributions?
Yes. The QLAC premium is excluded from the account balance used to calculate your RMD until the annuity begins paying. On a $1,000,000 IRA at age 73, moving $210,000 into a QLAC lowers the first-year RMD from about $37,736 to about $29,811.
What happens if I die before QLAC payments start?
It depends on the death benefit you chose at purchase. A return-of-premium option pays your beneficiaries the premium you paid less any income already received. A life-only contract pays nothing, and a joint and survivor contract continues income to your spouse.
Is a QLAC Worth It?
A QLAC is worth it if you have a large pre-tax balance, required minimum distributions you do not need for spending, and a realistic expectation of living past your mid-80s. In that case, deferring up to $210,000 out of your RMD calculation lowers taxable income every year until the annuity turns on, and the eventual payment is larger for having waited.
It is not worth it if you may need the money, if your balance is modest, or if your savings are mostly in Roth accounts. The contract is permanent and illiquid by design, and no amount of tax efficiency compensates for needing cash you cannot reach.
The honest answer for most people is that a QLAC should be one piece of a plan rather than the plan. Price it against the alternative of simply taking the RMD and reinvesting before you commit.
Sources
- Internal Revenue Service, Notice 2025-67, 2026 Amounts Relating to Retirement Plans and IRAs, for the 2026 QLAC premium limit.
- U.S. Securities and Exchange Commission, Qualified Longevity Annuity Contract (QLAC) glossary entry.
- Fidelity, Qualified longevity annuity contracts explained, for eligible accounts and a published payout illustration.
- MassMutual, What is a QLAC? Pros, cons, and rules, for RMD interaction and the disadvantages of the structure.
- Northwestern Mutual, What is a QLAC?, for death benefit and trade-off detail.
This page is general information, not tax advice. QLAC rules interact with your plan documents and your wider tax picture, so confirm the treatment with your own tax professional before purchasing.
