A QLAC, or qualified longevity annuity contract, is a deferred income annuity purchased inside a qualified retirement account or IRA that begins paying lifetime income at an advanced age, often between 75 and 85. QLACs receive special tax treatment: premiums up to specified limits are excluded from required minimum distribution calculations until income begins, effectively allowing retirees to defer taxation on a portion of their retirement savings. Once annuity payments start, they are taxed as ordinary income. QLACs are designed to hedge longevity risk by providing a guaranteed income stream later in life, when other assets may be depleted.

Advisors use QLACs in retirement income planning for clients who are concerned about outliving their assets and who can afford to carve out a portion of their IRA or plan balance. They explain contribution limits, start age options, and how excluding QLAC values from RMD calculations can reduce taxable distributions in earlier retirement years. Product comparisons may involve evaluating insurer strength, payout rates, inflation options, and death benefit features. Documentation of suitability and understanding of irrevocability is important, since QLACs are illiquid once purchased. Coordinating QLACs with Social Security, pensions, and other income sources helps build resilient, tax-aware retirement income strategies.