annuity insights - ressourcement（年金的见解u2014u2014ressourcement）.pdf

ANNUITY INSIGHTS QUALIFIED LONGEVITY ANNUITY CONTRACT What is a QLAC? Effective July 1, 2014, the U.S. Treasury Department released the final regulations for the Qualified Longevity Annuity Contract (QLAC). The QLAC provides advisors with a new and unique tool for helping retirees hedge their longevity risk by deferring withdrawals on a portion of their Individual Retirement Account (IRA) assets. The regulations allow an IRA owner to direct the lesser of $125,000 or 25% of retirement account funds into a Deferred Income Annuity (DIA). Income would not need to be declared until age 85, and the portion of assets used to purchase the QLAC deferred income annuity are omitted from the Required Minimum Distribution (RMD) calculations, allowing those assets to defer taxation until the latter years of retirement. Why Should Investors Consider a QLAC? The primary benefit of a QLAC is to hedge for longevity risk (the risk of outliving one’s income) by guaranteeing an income stream for the latter years of retirement. In addition, by utilizing a QLAC, taxpayers may avoid or reduce the amount of Minimum Distributions they are required to take from IRAs. Higher RMDs have the potential to place taxpayers in a higher tax bracket resulting in:  Greater taxation of Social Security Benefits  Potential for higher premiums for Medicare Parts B and D  Increased exposure to the new 3.8% Net Investment Income tax  Higher overall income taxes IRA without a QLAC IRA ($400k) with QLAC IRA ($750k) with QLAC 125,000 100,000 300