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5 Reasons to Own a QLAC

Stan Haithcock
March 3, 2024
5 Reasons to Own a QLAC

Hi there, Stan The Annuity Man, America's annuity agent, licensed in all 50 states. I put on this outfit garb, of course, I am fashion-forward, as they say. But the people in the background are going, "You look like you're the man of the people. Blue, red and patriotic. I am. I'm the man of the annuity people. I'm Stan The Annuity Man of the annuity people.

Today's topic is the five reasons you should consider purchasing a QLAC, Qualified Longevity Annuity Contract, and we will talk about that right now.

What Is a QLAC?

“What is a Qualified Longevity Annuity Contract, Stan The Annuity Man?” Excellent question. QLACs, acronym, were put on the planet in 2014 and developed and introduced by our friends at the IRS and the Department of the Treasury. And you're saying, "Well, wait a minute, Stan. First of all, are they our friends?" Yes, if they're watching, you are our friends. But they did that because of Social Security, which is the annuity that all of you already own. That was never put on the planet to be the sole source of retirement income, even though too many people have to use it as such. So, the Department of the Treasury and the IRS said, "Let's create an annuity that people can use inside of an IRA for lifetime income."

I know many people out there say, "Never put annuities on an IRA." I read an article by a well-respected financial journalist saying, "Never put an annuity inside of an IRA." And I just messaged him quickly. Qualified Longevity Annuity Contracts were put on the planet to use with qualified assets, meaning the money that's been deferring taxes. Now, there are five reasons for you to own QLAC.

The 5 Reasons to Own a QLAC

The first reason is for lifetime income. A Qualified Longevity Annuity Contract is, in essence, a Deferred Income Annuity structure, which is, in essence, an Immediate Annuity structure. It's a transfer of risk, lifetime income stream that it will pay as long as you live. You can structure it in a myriad of ways. You can structure it so that if you die in a fiery Leer jet crash, then the money's going to go to your family, not the evil annuity company. But lifetime income is why people should look primarily at Qualified Longevity Annuity Contracts. That's the first reason to consider it.

The second reason to consider it is that you can attach your spouse for joint lifetime income. You can take your IRA and your individual retirement account and attach your spouse for joint lifetime income. I will encourage you because your spouse has put up with you all these years, all of your nonsense, sayings, Barcaloungers, and watching the football game. Put them on the Qualified Longevity Annuity Contract. If you die, the income continues uninterrupted and unchanged for them. They have earned that right. And I know you're saying, "But wouldn't that lower the lifetime income because it's two lives, not one?" Yes, player, but they've earned the right to be on the policy. So, the second reason is you can attach your spouse for joint lifetime income.

The third reason for you to own a QLAC or consider owning one is the Required Minimum Distributions. At the time of this blog, check the date. The IRS taps you on the shoulder at age 73 and goes, "Hey, we're the IRS, and oh, by the way, all that money you've not been paying taxes on, you have to start taking it out, and we want to charge you taxes." And you say, "But IRS, I don't need that money." And they go, "We don't care. We're the IRS." And it's 73 at the time of this blog. It could change in the future, but right now, at age 73, you have to start taking money out. Those are called Required Minimum Distributions, RMDs.

The excellent part about QLACs is the money you place in a QLAC is not part of the RMD calculations. At the time of this blog, please check the day, because it will change. You can put $200,000 in a QLAC. It's going to change, so check the date. But let's say you had half a million dollars, $500,000 in your IRA, and you bought a $200,000 QLAC joint life with your spouse because they've earned the right to be there. When you take your required minimum distributions and make those calculations, you're making it on $300,000, not the $500,000, because the QLAC money is not part of those calculations. So, there's a potential for you to save some tax money legally and with the IRS and the Treasury Department's blessing. That's an annuity blessing. You didn't know that. Well, it is. That's what it is. That's the third reason.

The fourth reason that you would consider a QLAC is for inflation. "Well, Stan, how does that work? How do we do that?" Let's take the $200,000 example. We could split into 50s, four $50,000 policies, and have income start at future dates. In other words, let's say you're 70 when you buy the QLAC and will buy four policies, $50,000 a piece. You have income starting at 75. These are examples. 75, 77, 82, and 85 because at age 85, you have to turn on the income. That's the furthest out you can go with QLAC deferral. But what's happening? You're having income starting at future dates, which combats inflation.

The fifth and final reason you should consider purchasing a QLAC is the carriers. And we represent pretty much every carrier out there. But when we're doing lifetime income, it's A-plus or better for lifetime income. The carriers that are in the QLAC space are all monster carriers. You can't say, "What happens if they go out of business, Stan?" Well, then, you and I are in the grocery store fighting for the white loaf bread, the Bunny bread, and I'm going to punch you in the throat to get it. We have no power and I want the Bunny bread. That's what happens if one of these companies goes out. They're not going out of business. Please don't waste my time with that.

I'm not going to put my license on the line for you with a recommendation of an A-plus-plus carrier for a QLAC. The bottom line is those carriers can back up the claim because the reserve requirements for QLACs are massive, and they have the money to back it up. So, don't put on the tinfoil hat and go down the conspiratorial rabbit hole and go, "Yeah, but you know, nothing's too big to fail, Stan." Yes, it is. In the annuity industry, they have the big buildings for a reason. They're not smarter than banks. They're just more handcuffed than banks; these are life insurance companies.


Those are the five reasons for buying a QLAC. If I'm you, I go to The Annuity Man , and I go to the QLAC calculator, and I run quotes to my heart's content. No one will call you or show up at your doorstep and bug you. I have a QLAC owner's manual you can read. I've done a trillion QLAC videos. I've written QLAC articles. You can go all in on your analysis of QLACs, and then you can schedule a call with me or my team, and we'll listen to you. We will tell you the good, the bad, the positives, and the limitations of QLACs so you can make a good and informed decision on your terms and timeframe. My name is San The Annuity Man. Thanks for joining me. I'll see you next time.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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