By using IRA or 401(k) money to buy a longevity annuity, you can reduce RMDs and get income for life. Getty Images By Kimberly Lankford, Contributing Editor From Kiplinger's Personal Finance, January 2018 Q I have heard that a QLAC can help me reduce my required minimum distributions. What is it? --C.V., Edison, N.J.See Also: Take the Retiree Tax Quiz A A qualifying longevity annuity contract (QLAC) provides guaranteed lifetime income later in retirement and reduces your required minimum distributions. You can invest up to 25% of your total traditional IRA or 401(k) balance (or $130,000, whichever is less, up from $125,000 in 2017) in a QLAC, usually when you’re in your sixties or early seventies. That money is removed from your RMD calculations. The QLAC starts to pay out at a future date you choose—age 85 is the oldest—and continues for life. Payouts are taxable when you receive them. (Note that few 401(k)s offer QLACs at this point.) Sponsored Content For example, if a man invests $130,000 in a New York Life QLAC at age 65, he’ll receive $60,902 per year for the rest of his life starting at age 85 (payouts are less for women). Payments stop at death, but you can take a reduced payout—$43,690 a year for a man investing at age 65—in return for a cash refund to your heirs if you die before the payouts equal your initial investment. Got a question? Ask Kim at email@example.com.