What QLAC Calculators Don’t Tell You

You might have seen a QLAC calculator online and thought, “This is my loophole to beat the IRS.” Not quite. A Qualified Longevity Annuity Contract can be a powerful tool, but it is not a magic trick. It is simply a rule written by the IRS that allows you to delay Required Minimum Distributions on a portion of your IRA.

It is a great option for the right person, but like everything with the IRS, the details matter.

What a Qualified Longevity Annuity Contract Actually Is

A Qualified Longevity Annuity Contract, or QLAC, is a type of Deferred Income Annuity purchased inside a qualified retirement account like an IRA or 401(k). The whole point is to create a future income stream while deferring part of your Required Minimum Distributions.

The IRS lets you use a specific portion of your qualified money to buy a QLAC, which removes that amount from your RMD calculation until the income starts. That means smaller required withdrawals today, and guaranteed lifetime income later.

It is not a tax dodge. It is a tax deferral strategy with a contractual guarantee attached.

How the IRS Really Views a QLAC

The IRS is not giving you a free lunch. They are just allowing you to push the tax bill into the future. Every dollar that goes into a Qualified Longevity Annuity Contract is still taxable when it comes out as income. The difference is timing. You decide when those taxable payments begin, which gives you flexibility to manage your income levels in retirement.

The IRS has strict rules for QLACs. There is a maximum contribution limit. There is a latest possible start date for income. There are limits on the percentage of your retirement funds you can use. If you break those rules, your QLAC no longer qualifies, and you lose the tax advantage.

So yes, the IRS is sitting in the room with you when you buy one. They are the ones who wrote the playbook.

Why QLAC Calculators Can Be Misleading

When you plug numbers into a QLAC calculator, it is tempting to think that the results show your guaranteed payout. But those online calculators often assume generic carrier data, and they do not factor in your state of residence, your age, or the specific start date you select.

Real QLAC quotes are always contract-driven. The actual payout depends on your age at the time of purchase, the income start date you choose, and current interest rate conditions.

So, if a QLAC calculator shows one number, and a carrier quote shows another, trust the quote. The contract is the truth. Everything else is a guess.

Who Should Consider a QLAC

A Qualified Longevity Annuity Contract makes sense for people who do not need all their IRA income right now, and who want to guarantee future income later in life. It is especially useful if you are healthy, have a long life expectancy, and want to protect yourself from outliving your savings.

It also helps smooth out taxable income during the early retirement years. By delaying those Required Minimum Distributions, you can keep your income lower, which might help reduce the amount of Social Security that gets taxed and lower Medicare premium surcharges.

But a QLAC is not for everyone. If you need liquidity, flexibility, or access to your money in the short term, this is not your product. Remember, once you commit those funds, they are locked until your chosen start date.

The Bottom Line

A QLAC can be one of the smartest ways to create guaranteed lifetime income while managing your taxes, but only if you understand the rules. This is not a loophole, it is a legal strategy wrapped in a contract.

Do not trust online calculators or sales pitches that make it sound like a secret tax hack. The IRS is your silent partner in this deal, and they always get paid. The key is deciding when and how much.

You buy a QLAC for what it will do, not what it might do. Guarantees are in the contract. Period.