QLAC (Qualified Longevity Annuity Contract)

[Rai401k]

Does anyone know what a QLAC is, we have a client that would like to transfer their 401(k) to a QLAC to avoid taking his RMD. He is 70 1/2 and 5% owner.

The plan allows for in-service distributions at age 59 1/2.

Can he move his money from the 401(k) in to a QLAC? If so would he be required to take his RMD from the 401(k) for 2015 before doing so?

[Tom Poje]

I think its Qualified LACk of anything better to do with retirement $.

just kidding.

perhaps the enclosed will help, it certainly leans against QLACs, but negativity aside I think it is a fair description of the basic concept.

qlac.doc

[mbozek]

I thought that QLAC were intended to be marketed to TIRAs where up to $125k could be invested in a deferred annuity contract that would defer commencement of benefits for 20 years. There are many different annuity contracts that are being marketed with different features including whether there is a forfeiture of the amount deposited into contract if death occurs before distributions commence and whether withdrawals can be made before benefits commence. Its complicated.