A qualified longevity annuity contract (QLAC) is a specific type of deferred income annuity purchased inside a qualified plan or IRA that is designed to start guaranteed lifetime income at an advanced age, typically between 75 and 85. Regulations cap how much of a retiree's qualified balance can be allocated to QLACs and outline which product features are allowed. Amounts contributed to a qualified longevity annuity contract are excluded from required minimum distribution (RMD) calculations until income begins, effectively postponing taxation on that slice of the account. Once payments start, they are taxed as ordinary income. The core purpose of a qualified longevity annuity contract is to hedge longevity risk by creating a backstop stream of income later in life, when portfolio assets may be diminished. Because QLACs are illiquid and irrevocable, suitability analysis and clear client understanding are essential before purchase.

In retirement income planning, advisors use qualified longevity annuity contracts as a tool for clients who have adequate current income but worry about outliving their assets in their 80s or 90s. Planning software often models scenarios with and without a QLAC to show changes in RMDs, tax bills, and late-life income security. Advisors discuss contribution limits, start dates, optional death benefits, and insurer strength, emphasizing that once funds are placed into a qualified longevity annuity contract, access is very limited. Coordination with CPAs helps ensure that QLAC purchases are reported correctly and that clients understand the interaction with overall RMD strategies. Clear explanation prevents confusion about what portion of the IRA remains subject to standard withdrawal rules and how the eventual income stream will fit alongside Social Security, pensions, and other guaranteed sources.