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If $125k is moved from a 401k to a QLAC is there no RMD for…

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If $125k is moved...

If $125k is moved from a 401k to a QLAC is there no RMD for a 75 year old until payments on the QLAC start?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

I would like to move $125k from a 401k to a QLAC. I am 75 years old. If I start receiving payments from the QLAC when I am 85 does RMD start at 85? It is my understanding that funds in a QLAC (Qualified Longevity Annuity contract) do not require RMD with certain regulations. Is this correct?

Accountant's Assistant: Is there anything else the Accountant should be aware of?

The 401k now has $598k and I do a RMD every year.

Submitted: 4 months ago.Category: Tax
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12/21/2017
Tax Professional: Robin D., Senior Tax Advisor 4 replied 4 months ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,610
Experience: 15years with H & R Block. Divisional leader, Instructor
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Tax Professional: Robin D., Senior Tax Advisor 4 replied 4 months ago

You can reduce your RMD and potentially reduce your current taxes. Since the amount you invest in a QLAC is excluded from future RMD calculations, you won’t pay taxes on those amounts until you start to receive income.

It does not mean that the QLAC is not subject to RMD rules at all.

Deferred income annuity contracts are irrevocable, have no cash surrender value and no withdrawals are permitted. QLACs cannot be purchased with Roth or Inherited IRA dollars.

These are not that common and you should speak with your personal advisor prior to making any change.

A positive 5 star rating is appreciated so I am credited for assisting.

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