QLAC-prohibited features include:

QLAC-prohibited features include:

• A. Variable contracts, indexed contracts, contracts with commutation benefits or cash surrender values. Restrictions on death benefits
• B. Fixed contracts only
• C. Any contracts without death benefits
• D. Only indexed contracts

Answer: (A)

QLACs are intended to be simple, fixed, longevity payouts that delay distributions from a qualified plan. To keep the product true to that purpose, features that introduce cash value, market risk, or a death benefit are not allowed. Variable or indexed contracts introduce investment risk or growth tied to an index, which conflicts with the idea of a guaranteed, fixed lifetime income and the specific tax/RMD treatment of a QLAC. Commination benefits or cash surrender values give access to a lump sum or early withdrawal, undermining the goal of delaying distributions and preserving tax-deferred assets. Restrictions on death benefits prevent any design where a beneficiary could receive a payout after the annuitant’s death, which would alter the contract’s intent as a pure longevity product. Those combined prohibitions are why the option listing all these features best captures what cannot be part of a QLAC.

QLACs are intended to be simple, fixed, longevity payouts that delay distributions from a qualified plan. To keep the product true to that purpose, features that introduce cash value, market risk, or a death benefit are not allowed.

Variable or indexed contracts introduce investment risk or growth tied to an index, which conflicts with the idea of a guaranteed, fixed lifetime income and the specific tax/RMD treatment of a QLAC. Commination benefits or cash surrender values give access to a lump sum or early withdrawal, undermining the goal of delaying distributions and preserving tax-deferred assets. Restrictions on death benefits prevent any design where a beneficiary could receive a payout after the annuitant’s death, which would alter the contract’s intent as a pure longevity product.

Those combined prohibitions are why the option listing all these features best captures what cannot be part of a QLAC.