The Best Way to Defer RMDs (and Their Tax Bills): QLACs

Concerned about RMDs? Worried about outliving your retirement savings? A qualified longevity annuity contract defers some RMDs and guarantees lifetime income.

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The income from required minimum distributions (RMDs) is your reward for having diligently funded your retirement accounts. But the no-free-lunch principle applies: RMDs are taxable. In addition, because they reduce the value of your retirement accounts, you’ll have less to draw on in future years, especially if you have a long lifespan.

You must start taking RMDs from your IRA, 401(k) plan or other qualified retirement plan when you reach age 73. The only good way to defer some of them is to transfer a portion of your retirement plan assets to a qualified longevity annuity contract (QLAC). The money in a QLAC is excluded from plan assets on which RMDs are calculated.

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Ken Nuss
CEO / Founder, AnnuityAdvantage

Retirement-income expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed and immediate-income annuities. Interest rates from dozens of insurers are constantly updated on its website. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities. More information is available from the Medford, Oregon, based company at or (800) 239-0356.