QLAC RMD Rules: The One Exception the IRS Allows

A qualified longevity annuity contract lets you move up to $210,000 of retirement account money out of the balance used to calculate required minimum distributions, for 2026 per IRS Notice 2025-67. Income payments must begin no later than the first day of the month after your 85th birthday.

Every year after your required beginning date, the IRS effectively puts your retirement accounts on a scale. It weighs the December 31 balance, applies a factor from its own table, and tells you the minimum you have to withdraw and pay tax on, whether you need the money or not.

A QLAC is the one legal way to take a box off that scale. You move a slice of IRA or plan money into a specific kind of deferred income annuity, and the IRS stops counting that slice when it weighs your accounts. The money is still yours. It is still going to be taxed. But it is not on the scale, and it will not be until the contract starts paying you, which can be as late as age 85.

That is the entire idea, and it is genuinely the only exception of its kind in the required distribution rules. It is also narrower and less flexible than most articles let on. Here is exactly how the rules work and where they bite.

What does a QLAC actually do to your RMDs?

It removes the premium you paid from the account balance used to compute required minimum distributions, so your annual required amount is calculated on a smaller number. The deferral lasts until the contract’s income start date.

So a QLAC is a deferral tool, not an avoidance tool. The tax does not vanish. It moves later in life and arrives as a stream of income payments rather than as a forced withdrawal from a balance. Whether that trade is good depends almost entirely on how long you live, which is the point of the product. Our QLAC overview covers the product itself in more depth.

How much can you put into a QLAC in 2026?

The limit for 2026 is $210,000, and it is a lifetime aggregate premium limit per person across all of your retirement accounts, not an annual limit and not a per-contract limit.

That last figure is the change most people have not caught up with. Before the SECURE 2.0 Act of 2022, a QLAC premium was capped at the lesser of $145,000 or 25 percent of your account balance, which made the strategy nearly useless for savers with modest accounts. Section 202 of SECURE 2.0 deleted the percentage cap and raised the dollar limit to $200,000 indexed for inflation, which is how it reached $210,000 for 2026.

When must QLAC payments begin?

No later than the first day of the month after you turn 85. That is the outer limit written into the rules, and it is the deadline that gives the product its purpose.

You can choose an earlier start date, and many buyers do. A 68-year-old who wants income to begin at 80 can build that contract. What you cannot do is push the start past 85 or leave it open-ended, because the exclusion from your RMD balance is granted on the condition that the money eventually comes out as income.

The start date you choose drives the payout. A longer deferral means a larger eventual payment for the same premium, because the insurer has more time and a shorter expected payout period. That is the mechanical reason age 85 produces the largest number, and it is also the reason a QLAC is a longevity bet rather than a general income plan.

Which accounts can fund a QLAC?

Traditional retirement accounts can. Roth accounts cannot, and inherited accounts cannot.

• Traditional IRA. The most common funding source by a wide margin.
• 401(k) plans. Permitted, but only if the plan actually offers a QLAC. Many do not.
• 403(b) plans. Permitted on the same terms.
• Governmental 457(b) plans. Permitted on the same terms.
• Roth IRA. Not permitted. Roth IRAs have no lifetime required distributions for the original owner, so there is nothing for a QLAC to defer.
• Inherited IRA. Not a QLAC funding source. Beneficiary accounts run on their own distribution rules.
• SEP and SIMPLE IRAs. Subject to restrictions depending on whether the plan is ongoing. Ask the custodian before you assume.

The Roth exclusion trips people up because it sounds like a limitation. It is not. There is no problem to solve inside a Roth IRA, because the original owner is not subject to lifetime required distributions in the first place.

What does the contract itself have to look like?

The IRS is specific about the product, and a contract that misses any of these requirements is not a QLAC, which means the premium goes right back onto the RMD scale.

• It must be a fixed deferred income annuity. Variable, indexed, and similar contracts do not qualify.
• It must have no cash surrender value. You cannot cash it in, and that is a feature the IRS requires rather than a carrier decision.
• The contract must state, when issued, that it is intended to be a QLAC.
• A return of premium death benefit is permitted, so a buyer who dies before payments start can have the premium returned to a beneficiary rather than forfeited.
• Joint and survivor payments with a spouse are permitted. SECURE 2.0 Act section 202 also clarified that a QLAC keeps its status if the couple divorces before the annuity starting date, provided a qualifying domestic relations order is in place.
• A free look period is permitted but not required, and section 202 clarified that it may run up to 90 days.
• The issuer files Form 1098-Q with the IRS each year to report the contract’s status.
• Payments are backed by the claims-paying ability of the issuing insurance company. A QLAC is not FDIC insured and is not backed by a bank or the government.

How much RMD does a QLAC actually defer?

Enough to matter, but less than the headline suggests, because the exclusion applies to the premium rather than to a percentage of your income. Here is the arithmetic on a single year.

This is an illustration using the current Uniform Lifetime Table factor for age 73 published in IRS Publication 590-B, not a projection of any particular contract. Your own numbers depend on your balance, your age, and the premium you pay. Run yours through our RMD calculator before drawing conclusions, and read the annuity RMD rules guide for how required distributions work when annuity contracts are in the mix.

Notice what the table does not show: any tax savings. It shows roughly $7,900 of taxable income moved out of that year. Whether that is worth anything to you depends on your bracket, on whether the shift keeps you under a threshold that matters, and on what the eventual QLAC payments do to your income at 85.

What are the honest trade-offs?

A QLAC gives up a great deal of flexibility for a narrow benefit, and it is the wrong product for most people who read about it.

• No liquidity, by rule. A QLAC has no cash surrender value. That money is unreachable until payments begin, no matter what happens in your life.
• Inflation risk over a long deferral. A payment that starts in 15 or 20 years buys less than the same number today unless you purchase an increasing payment option, which lowers the starting amount.
• A genuine longevity bet. If you die before payments begin and did not elect a return of premium death benefit, your heirs may receive nothing from the contract.
• The tax comes back, larger. Deferred money keeps growing, and the payments that eventually start are ordinary income, potentially in a year when Social Security and other income are already on the return.
• Opportunity cost. The same premium left invested might have grown more, or might have grown less. You are trading an unknown outcome for a contractual one.
• Availability. Fewer carriers issue QLACs than issue standard deferred income annuities, so the shopping pool is smaller.

None of that makes the product bad. It makes it specific. A tool with no liquidity and a payout starting a decade or two out is either exactly right for your situation or clearly wrong for it, with not much middle ground.

Who does a QLAC actually fit?

It fits a fairly narrow profile: someone with more retirement account money than they need in their seventies, a real concern about outliving their savings, and no need for that particular slice of money in the meantime.

This article is general education, not tax advice. QLAC eligibility, limits, and the RMD effect depend on your accounts and your birth year, so confirm the specifics with a qualified tax professional before you fund a contract.

Moving forward

Back to the scale. Every year the IRS weighs what is in your retirement accounts and tells you what has to come out. A QLAC is the one sanctioned way to set a box aside so it is not weighed, and the price of that exception is that you cannot open the box until the contract says so.

For someone who genuinely does not need that slice of money before their mid-eighties, that price is small and the peace of mind is real. For someone who might need it at 78, it is a serious mistake dressed up as a tax strategy. The way to tell the difference is to model your own required distributions with and without the contract, then look at what your income actually needs to be in each decade.

If you want help running that comparison against real contract terms, AnnuaLife’s Certified Annuity Advisor match can connect you with an advisor who works with these contracts. Start with the QLAC product page for the mechanics, and note that QLAC guarantees rest on the claims-paying ability of the issuing insurer rather than any bank or government backing.

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