![]() QLAC investors at the legislative maximum get two simultaneous tax benefits: $200,000 is excluded from the RMD test, and the QLAC income can be deferred to later in retirement. What the higher QLAC limits could mean to you As mentioned above, the new rules allow up to $200,000 of tax-benefitted savings toward a QLAC, and the percentage-of-savings requirement has been removed.Īnother benefit is included in the SECURE 2.0 Act: You can now include a “return of premium” feature in your QLAC so that the purchase amount, less any payouts, goes to a beneficiary at your passing. Rules in the 2019 legislation that created the original SECURE Act (stands for Setting Every Community Up for Retirement Enhancement) limited the tax-deferred investments into a QLAC to $125,000, (with adjustments for inflation) or 25% of the account if lower. Your adviser may not talk about a QLAC or income annuities generally because they don’t have the planning software to provide guidance to customers.) For an overview of what’s in the legislation, see SECURE 2.0 Act Changes 401(k), IRA, Roth, and Other Retirement Plan Rules.Īt the same time, many retirement advisers have been caught unaware of the QLAC provisions. ![]() It also permits unused 529 accounts to be applied to a Roth account. Most of the news reporting about SECURE 2.0 has focused on the other parts of the legislation that make it easier for part-time employees and employers to create savings plans, along with an extension to age 73 at which age RMDs must be claimed. If you’re single but your retirement income plan is a little shaky after the financial upsets of 2022, and you’re concerned about inflation, you can use the QLAC to ladder guaranteed income that starts at age 75 and continues to grow.They can use the $100,000 to purchase lifetime income starting at age 85 of $36,000 per year - guaranteed. A couple, both age 65 with a retirement income plan that’s in good shape, wants to ensure they can pay premiums on their long-term care and life insurance late in retirement.
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