QLAC Calculator: How Much Does a Qualified Longevity Annuity Contract Reduce Your RMDs?
A QLAC lets you shelter up to $210,000 of your traditional IRA from the RMD calculation — permanently removing that premium from your year-end balance while the contract is in deferral. The result: smaller annual RMDs, lower taxable income, and a stream of guaranteed income starting whenever you choose (up to age 85). This calculator shows your RMD reduction, cumulative tax savings during the deferral period, and a rough estimate of what your QLAC income stream might look like.
How a QLAC removes money from your RMD calculation
Your RMD is calculated as: prior year-end IRA balance ÷ IRS life-expectancy divisor for your age. Under Treasury Regulations § 1.401(a)(9)-6(q), a QLAC premium is excluded from the year-end balance used in that calculation — every year until income begins.2
IRS Uniform Lifetime Table divisor at 73: 26.5
Without QLAC: $2,000,000 ÷ 26.5 = $75,472 RMD
After $210,000 QLAC purchase: ($2,000,000 − $210,000) ÷ 26.5 = $67,547 RMD
Annual reduction: $7,925/year while the QLAC is in deferral
At a 24% federal bracket, that's roughly $1,900 in annual federal tax savings — every year until the QLAC starts paying at age 82.
The RMD reduction is permanent while the QLAC is in deferral: the $210,000 never re-enters the RMD base. And because RMD divisors shrink every year as you age, the percentage reduction grows slightly over time — the same dollar amount excluded represents a larger share of a shrinking divisor.
2026 QLAC rules at a glance
| Rule | Detail |
|---|---|
| Maximum premium (per person) | $210,000 for 2026 — inflation-adjusted annually per IRS COLA schedule1 |
| 25%-of-balance cap | Eliminated by SECURE 2.0 § 202 (effective 2023). Flat dollar limit only.1 |
| Eligible accounts | Traditional IRAs, 401(k)s, 403(b)s, governmental 457(b)s. Not Roth accounts. |
| Income start date | Must begin no later than the first day of the month following age 85. You choose the date at purchase. |
| Death benefit | Optional. A return-of-premium provision pays any unused premium to heirs — reduces monthly income in exchange. |
| Survivor options | Joint-life payout with spouse available; reduces payment but provides income to surviving spouse. |
| Liquidity | None after purchase. QLAC premiums are irrevocable — this is the primary tradeoff. |
| QLAC per couple | Each spouse can fund a separate $210,000 QLAC from their own IRA — $420,000 combined. |
| IRS Form 1098-Q | Issuer files annually confirming the QLAC meets IRS requirements; you receive a copy. |
When a QLAC makes sense — and when it doesn't
| Your situation | QLAC fit |
|---|---|
| RMDs exceed your spending needs and you don't want to reinvest forced distributions | Strong fit — reduces unwanted income while building late-life income floor |
| Have other liquid assets (taxable brokerage, savings) for emergencies | Strong fit — QLAC illiquidity is acceptable when you have other reserves |
| Want guaranteed income starting in your 80s when managing a portfolio gets harder | Strong fit — longevity insurance for late-life spending certainty |
| Your IRA is your only liquid asset and you may need withdrawals | Poor fit — QLAC premium is irrevocable; you lose access to those dollars |
| Ages 60–72 with a Roth conversion opportunity | Consider Roth first — conversions permanently eliminate RMDs; QLAC defers them. Roth is usually the better first lever if you have conversion capacity. |
| Charitably inclined and in the 70½+ window | Consider QCDs alongside or instead — QCDs reduce income with no illiquidity and help if charity is part of your plan |
QLAC income: what to expect when payments begin
Once the QLAC income start date arrives, the insurer pays you a guaranteed monthly or annual amount for life — or joint lives, if you elected that option. The payment depends on: (1) your age at purchase, (2) the income start date you chose, (3) the insurer's rates at purchase, and (4) whether you elected any death benefit or survivor options.
The income estimate in the calculator above uses approximate industry payout ranges based on deferral length. Actual QLAC quotes vary significantly — current interest rates, insurer strength, and contract terms all affect the payment. A fee-only advisor can run real quotes across multiple insurers to find the best income-to-premium ratio for your situation.
QLAC interaction with IRMAA Medicare surcharges
Because a QLAC reduces your annual RMD, it lowers your adjusted gross income — which can move you below an IRMAA threshold. IRMAA surcharges use a two-year lookback (your 2026 income determines 2028 premiums), so a smaller RMD today reduces Medicare costs two years later. For a couple where both spouses are on Medicare, dropping one IRMAA tier saves $1,900–$3,800/year in premiums.
When QLAC income begins at 80 or 85, those payments are fully taxable ordinary income — which may push you back into higher IRMAA tiers. Factor this into the income start date you choose. See our IRMAA Planning Guide and QCD Calculator for the full IRMAA tier analysis.
Sources
- IRS Notice 2025-67 — 2026 Retirement Plan Dollar Limits. QLAC premium limit for 2026: $210,000 (inflation-adjusted from the $200,000 SECURE 2.0 base using IRS COLA schedule). SECURE 2.0 § 202 eliminated the 25%-of-account-balance cap effective 2023.
- 26 CFR § 1.401(a)(9)-6(q) — Qualifying Longevity Annuity Contracts. QLAC definition, RMD exclusion mechanism, maximum deferral age (85), death benefit restrictions, IRS Form 1098-Q reporting requirement.
- IRS Publication 590-B — Distributions from Individual Retirement Arrangements. IRS Uniform Lifetime Table divisors effective January 1, 2022 (per T.D. 9930). Divisors used in calculator: age 73 = 26.5, age 75 = 24.6, age 80 = 20.2, age 85 = 16.0.
- Fidelity — Qualified Longevity Annuity Contracts (QLACs). Overview of QLAC mechanics, SECURE 2.0 changes, payout structure, and tradeoff considerations. Cross-reference for RMD reduction examples.
QLAC rules verified against 2026 IRS limits (Notice 2025-67). RMD divisors: IRS Pub 590-B (2022+ Uniform Lifetime Table). Payout estimates are approximate ranges based on typical deferred income annuity rates — actual quotes vary by insurer, age, and interest rates. Confirm current limits at irs.gov before purchasing.
Related tools and guides
- How to Reduce Your RMDs — 5 strategies including Roth conversions, QCDs, and QLACs
- RMD Calculator — see your required distributions by age through the next 10 years
- Roth Conversion Calculator — model lifetime tax savings from pre-RMD conversions
- QCD Calculator — tax and IRMAA savings from qualified charitable distributions
- IRMAA Planning Guide — how RMD income stacks against Medicare surcharge thresholds
Model your QLAC decision with a specialist
Whether a QLAC makes sense depends on your full balance picture: how large your IRA is relative to other assets, your current and projected IRMAA tiers, your charitable intentions (QCDs may serve some of the same goals with more flexibility), your estate goals, and whether you have Roth conversion capacity remaining. A fee-only advisor who specializes in retirement distribution planning will run real QLAC quotes alongside your full tax model — and tell you honestly if Roth conversions or QCDs are a better first move for your situation.
RMD Advisor Match is a matching service. We connect you with vetted fee-only financial advisors in our network — we don't manage money or provide advice ourselves. Advisors in our network are fiduciaries who charge transparent fees, not product commissions.