Which statement about QLACs compared to RMDs is true?

Which statement about QLACs compared to RMDs is true?

• A. The contract duration is unlimited
• B. The contract must begin distributions by age 85; QLAC amount is included in RMD calculations
• C. The contract must begin distributions by age 90; QLAC amount not included in RMD calculations
• D. The contract must begin distributions by age 85; QLAC amount is not included in RMD calculations

Answer: (B)

A QLAC lets you put part of your IRA into a longevity annuity that starts paying you later, which influences when and how you take distributions from the retirement account. The option statement reflects two practical points about QLACs: First, the payout from the QLAC must begin by age 85. This deadline is built into the structure of a QLAC to ensure you still receive some longevity protection while setting a clear latest start for itsIncome stream. Second, the QLAC amount is included in RMD calculations. This means that for the purposes of determining the required minimum distribution in a given year, the portion of the IRA funded into a QLAC remains part of the calculation. The QLAC payments themselves occur later, but the value allocated to the QLAC is treated as part of the account balance used to compute RMDs. So, the true statement combines the 85-year start requirement with the treatment of the QLAC amount in RMD calculations, aligning with how the exam presents the concept.

A QLAC lets you put part of your IRA into a longevity annuity that starts paying you later, which influences when and how you take distributions from the retirement account. The option statement reflects two practical points about QLACs:

First, the payout from the QLAC must begin by age 85. This deadline is built into the structure of a QLAC to ensure you still receive some longevity protection while setting a clear latest start for itsIncome stream.

Second, the QLAC amount is included in RMD calculations. This means that for the purposes of determining the required minimum distribution in a given year, the portion of the IRA funded into a QLAC remains part of the calculation. The QLAC payments themselves occur later, but the value allocated to the QLAC is treated as part of the account balance used to compute RMDs.

So, the true statement combines the 85-year start requirement with the treatment of the QLAC amount in RMD calculations, aligning with how the exam presents the concept.