QLAC Annuity Quotes
Hey, Stan The Annuity Man. You have punched into Google the term "QLAC annuity quotes" or something to that effect because, magically, I'm here, and we're talking about QLAC quotes. What the heck is a QLAC? Qualified Longevity Annuity Contract. You're saying, "Hey, Stan, enough of that crap. How about where do we get the quotes?" You can go to my proprietary QLAC Annuity Calculator to get a hassle-free, no-obligation quote. But I want you to hang in there with me because what I'm going to do during this blog, and it's going to be a short one, is go through what a QLAC is, how to structure it, the limitations, benefits, those types of things. And as a giveaway, I'm going to give you this book, QLAC Owner's Manual, for free. So, hang in there with me. We're going to learn about QLACs. We're going to learn about how to get the quotes. We're going to learn about how to structure the quotes. We're going to learn about life, so hang in there with me.
What is a QLAC?
Let's do a little quick history here. In 2014, our friends at the IRS and the Treasury Department said, "Hey, we really like Americans, and let's put together a product so they can have future income using their IRA." I'm not sure they worded it like that, but that's what happened. So, in 2014, they wanted most people in the 401(k) world to use it, but that's been a slow, slow movement. But in some 401(k)s, you can buy a QLAC, but traditional IRAs, not Roths, traditional IRAs is where you can use Qualified Longevity Annuity Contracts.
Now, the rules for funding Qualified Longevity Annuity Contracts are a moving target. When it first came out in 2014, you could put $125,000 or 25% of your IRA assets, whichever is less. A couple of years later, they bumped it to $130,000, and in 2023, it's now $200,000. And they're also talking about doing some other things in 401(k)s, but it's just legislative mumbo jumbo right now. So, for 2023, if you're reading this blog at a later date, it's $200,000. That's the current rule, and if you have an IRA and your spouse/partner has an IRA, then they can do a QLAC as well.
The great part about QLACs, in Stan The Annuity Man's opinion, America's Annuity Agent, licensed in all 50 states, is that you can attach your spouse or partner for joint lifetime income, even though it's your individual IRA. That is fantastic. That's the primary benefit I see with QLACs. Secondarily, the money you put into a QLAC is not used to calculate your Required Minimum Distributions when you turn 73. That's also a good thing. Not a pound the table reason to buy one. And then the third reason is that QLACs are an excellent hedge against inflation in the future because you have income starting in the future. Now you can start QLAC income as short as age 71 up to age 85. At age 85, you have to turn on the income stream, but you don't have to defer it that long. You could say 77, or you could ladder it and buy three and, say, have some start at 75 and 77 and 80. It's up to you; it's customizable.
Now, you can't use QLACs in your Roth IRA, just your traditional IRA, and not an inherited IRA. Food for thought. You can run it joint life. Typically, here's what we see. We either do joint life or we do single life. People structure it in two primary ways, so let's talk about that. They either do joint or single life only, or joint and single life with cash refund. Let's explain that structure because you're asking about quotes, and you're going to get quotes using our QLAC Annuity Calculator.
So, joint life only means that when your Learjet hits the mountain, and both of you are on the plane, money goes poof. But let's say just one of you dies, and it is joint life only, then the income continues uninterrupted and unchanged for your spouse's life until they die, and then the money goes poof. Joint life only or single life only provides the highest payout. Why? Because you're shouldering some of that risk. And remember, the payments are primarily based on your life expectancy at the time you take the payment. Interest rates play a secondary role. In addition, the longer you defer, the more the annuity company enhances the payout. In the South, they call it cooking the money. The more it cooks, the better.
Now, the other way, and this is really the most popular way I see people running QLAC quotes, because I'm Stan The Annuity Man, and I'm the number one agent in the country. I'm America's Annuity Agent, licensed in all 50 states, even yours. They'll do joint life or single life with cash refund. What does that mean? The annuity company is still on the hook to pay you for the rest of your life regardless of how long you live, even if you live to 150. Got it? Don't say, "What's joint life mean? Does it mean if I live to 110?" It means whenever. It means if there's a cure for cancer, you live to 180, then they're on the hook. It's a transfer risk. I don't know the ROI until you die, ROI meaning return on investment, but "investment" doesn't rhyme with "die" so I say ROI until you die.
So, joint life with cash refund, single life with cash refund. The cash refund part means that when you die, whatever's left in the account goes to your beneficiaries listed on the policy in a lump sum format. Remember that these, to the QLAC payments or any payment from any type of annuity, is a combination of return of principal plus interest. Got it? Which begs the question, what happens when the account goes to zero and we've outlived our life expectancy? That's the good news. That's the benefit proposition that only annuities have: a transfer of risk lifetime guarantee. So, even if the account is at zero, the annuity company is on the hook to pay you for the rest of your beautiful life. Never forget that.
I recently worked with a client that has gotten QLAC quotes, the QLAC book from me, gone through some discussions, and at the end of the day, he's like, "It's hard for me to buy a QLAC, Stan The Annuity Man, because I feel like I'm losing opportunity. I could be buying stocks. I can get a better return on investments." Of course, you can. QLACs are not investments; they're contracts, they're transfer risk contracts. So, we discussed it, and I said, "Okay, is your wife a pretty good stock trader? Does she follow the volatility index and those types of things?" He's like, "Of course not." That's not a sexist comment because some of the best traders out there are females, I guarantee you. I used to work for some of the major firms, and that is a fact. But in this specific situation, his wife could give a rip about any of the investments. All she wanted to do was see the kids and the grandkids. Like my wife, she doesn't care about any of this stuff.
So, I said, "Why don't you set the QLAC up joint life with your spouse so you can leave that income stream for her, guaranteed for the rest of her life, and it will hit the bank account monthly? And even though she doesn't like you right now, Fred, when that income stream hits every month, she's going to go, 'I really didn't like Fred, but I really do like that income stream.'" And he's like, "You know what? I'm going to do that."
I find that the QLAC is an emotional buy in many cases. Emotional meaning that the person buying the QLAC might not need it or might not see a need for it, but they sometimes, in a lot of cases, see a need for their spouse to be set up with an additional lifetime income stream. So, put that in the back of your head, Gordon Gekko trader out there. That might be talking to you. Stop looking at it as an investment. Look at it as a transfer risk pension that you can add your spouse to your IRA so they can get a lifetime income stream.
All right, so I've done all these videos, I do all these videos, you see all these videos on the Stan The Annuity Man YouTube channel. The question begs, "Have you done one on what a QLAC is? What is a Qualified Longevity Annuity Contract? Hey, Stan, have you done that video?" Yeah, it's right here. I got even more down and dirty than I got today. But in conjunction with what we discussed about you getting quotes for QLACs, that will help. Once again, where to go to get QLAC quotes? You can visit my site, and get all your annuity quotes for free.
Also, remember the book? You can download my QLAC annuity manual and my five other annuity manuals for free! Just click on this link, and it will direct you to our download page. Just like our annuity quotes, it's free with no obligation. So, with that, thanks for joining us. 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.