Exchange Options Boost the QLAC Appeal Post-SECURE

by Prof. Robert Bloink and Prof. William H. Byrnes

Qualified longevity annuity contracts (QLACs) are rarely placed in the spotlight when it comes time to evaluate retirement income planning solutions. Generally, QLACs are subject to tight restrictions that can make them unattractive to taxpayers who may not want to risk waiting until age 85 to access their hard-earned retirement dollars. In recent years, legislators have used the pair of SECURE Acts to increase the appeal of the QLAC structure by increasing the flexibility of the rules governing these annuities. The most recent IRS guidance has built upon this flexibility and now offers a degree of peace of mind for clients who have feared being locked into an annuity contract that later turns out to be a wrong fit. QLAC exchanges are now on the table, and advisors should brush up on the new rules to guide clients who may now take a stronger interest in the benefits of QLACs.

QLACs: The Basics