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Avraham "AY"  Rappaport, CLTC

President, Financial Professional

 

Yaniv "Jay" Natanov

President, Financial Planner

 

Eli Rappaport

Vice President, Financial Planner

 

Shlomo Rosenstein

Financial Professional

 

Ozzie Marizan

Financial Planner

 

Joseph Greer

Employee Benefits Administrator

 

Dylan Pinsky

Client Relations Manager

 

Premier Financial

6395 Dobbin Road, Suite 102

Columbia, MD 21045

 

Phone:  240-309-6001

 

Email: dylan.pinsky@prudential.com

Website: premierfinancial1.com

July/August 2023

Understanding QLAC

Understanding QLAC

A Qualified Longevity Annuity Contract (QLAC)* is a type of deferred annuity purchased with funds from a qualified retirement plan or individual retirement account. It is designed to provide guaranteed income later in life. A QLAC may help a retiree remain in a lower tax bracket by reducing the balance in a retirement account used to calculate required minimum distributions (RMDs).


How It Works
Secure 2.0 allows an individual to move up to $200,000 from a qualified retirement plan or IRA into a QLAC. The buyer purchases an annuity contract either with a lump sum payment or a series of premiums. Taxes are deferred until payments begin. Payments must start by the annuitant’s 85th birthday, which is also when RMDs kick in. Payments are taxed at regular income tax rates.


Three Options
QLAC purchasers generally have three options to choose from.


  • Payments end when the annuity owner dies.

  • Payments stop after the death of the owner and a spouse (joint life QLAC).

  • The plan pays a refund to a designated beneficiary.


The second two options will result in lower monthly annuity payments. Buyers can also add cost-of-living adjustments to their contracts.


Laddering QLACs
Purchasing a series of smaller QLACs over several years can help manage the risk that growth will be locked in at a fixed rate. Laddering can provide an advantage if interest rates rise.


QLACs may or may not be right for you, so before purchasing a QLAC, check the ratings of the issuing company and consult your financial professional.

*Annuity products are not FDIC-insured, and their guarantees are backed solely by the claims-paying ability of their issuing life insurance company.

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Premier Financial is not affiliated with Prudential Financial. Premier Financial sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Premier Financial is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Premier Financial and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Dylan Pinsky is employed by Eli Rappaport and not The Prudential Insurance Company of America or its subsidiaries.
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