Tax Facts

557 / What types of retirement accounts can hold a qualified longevity annuity contract (QLAC)?

A qualified longevity annuity contract (QLAC, see Q 556) may be held in a qualified defined contribution plan (such as a 401(k) plan), IRC Section 403 plans, traditional IRAs and individual retirement annuities under Section 408, and eligible IRC Section 457 governmental plans.1

An annuity purchased within a Roth IRA cannot quality as a QLAC. If a QLAC is purchased under a traditional IRA or qualified plan that is later rolled over or converted to a Roth IRA, the annuity will not be treated as a QLAC after the date of the rollover or conversion.2 While it is true that an annuity purchased in a Roth IRA cannot qualify as a QLAC, it should not be assumed that a Roth IRA cannot purchase a longevity annuity. The final regulations do not prohibit this.

1.     Treas. Reg. § 1.401(a)(9)-6, A-17(b)(2).

2.     Treas. Reg. § 1.401(a)(9)-6, A-17(d)(3)(ii).

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