A. Yes, if you purchase a deferred income annuity as a Qualified Longevity Annuity Contract (QLAC), those funds may be excluded from Required Minimum Distribution (RMD) calculations. Reducing RMDs could help extend your savings and lower the taxes you pay.
Here are a few key advantages of a QLAC:
- Allocate up to $125,000 (lifetime) or 25% of your IRAs, whichever is less
- Delay paying taxes on money that isn't needed in early retirement
- Guaranteed lifetime income later in retirement
- Potential to leave more assets to a surviving spouse or heirs
With some exceptions, in exchange for higher payments, an income annuity permanently converts principal to a guaranteed income stream.