People are living longer these days. The longer time horizon means more time spent in retirement and more concerns about funding all those extra years. No one wants to run out of money deep in retirement, so it is understandable many fear outliving their resources and not having adequate income for long-term care and other retirement expenses.

For retirees with Individual Retirement Accounts (IRAs) and 401(k) savings funded with pretax money, the annuity industry has a product for you: Qualified Longevity Annuity Contracts (QLACs).

They are a type of longevity annuity that allows payments to be deferred until sometime in the future. A QLAC lets you swap some money in your qualified retirement plan to guarantee monthly payments for the rest of your life after a specified date.

To learn more about how to prepare for your retirement today please watch our other videos and subscribe @everythingfinancial…(read more)

LEARN MORE ABOUT: Qualified Retirement Plans

REVEALED: How To Invest During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

Barry Norman Explains Qualified Longevity Annuity Contract for Your Retirement with Your IRA or 401k

retirement planning can be a complex and overwhelming task, especially when it comes to finding the right financial tools to secure your future. One such tool that has gained significant attention in recent years is the Qualified Longevity Annuity Contract (QLAC). Renowned financial expert Barry Norman has been instrumental in explaining the benefits of QLACs and how they can be utilized with IRAs or 401ks to ensure a comfortable retirement.

A QLAC is a type of deferred income annuity that allows individuals to allocate a portion of their retirement savings to receive guaranteed income later in life. The primary purpose behind this financial instrument is to protect against the risk of outliving your savings, also known as longevity risk. By purchasing a QLAC, individuals can secure a steady income stream that starts at a later age (typically 80 or 85) and continues for the rest of their lives.

What sets QLACs apart from traditional retirement savings vehicles is their unique compliance with Internal Revenue Service (IRS) regulations. These rules specify that QLACs can be purchased with funds from an IRA or 401k, up to a certain limit, without triggering required minimum distributions (RMDs). RMD is the minimum amount individuals must withdraw from their retirement accounts annually once they reach a certain age (currently 72 years old for IRAs and 401ks).

Barry Norman emphasizes that the advantage of using a QLAC is the ability to postpone RMDs, thereby reducing current taxable income and allowing your retirement savings to grow for a more extended period. By deferring RMDs, individuals can also lower their tax liability in the early years of retirement when their taxable income may still be relatively high. This can lead to significant tax savings, especially for those who do not necessarily rely on their retirement savings during their initial retirement years.

Additionally, QLACs offer a sense of security by guaranteeing lifetime income. This stability can alleviate concerns about exhausting your savings prematurely, giving you peace of mind throughout retirement. However, it’s important to note that QLACs might not be suitable for everyone, and individual circumstances should be carefully evaluated before making any financial decisions.

Barry Norman also highlights the flexibility of QLACs, as they can be customized to meet individual needs. For example, you can choose to include your spouse as a joint annuitant, ensuring that the income continues for both lives. There are also options to add inflation protection or a return of premium feature, although these additional benefits come at an additional cost.

To conclude, Barry Norman’s explanation of Qualified Longevity Annuity Contracts brings attention to the potential benefits they can offer for retirement planning. QLACs provide a unique opportunity to stretch your retirement savings, delay required minimum distributions, and ensure a stable income stream during your later years. However, it’s crucial to consult with a financial advisor to assess your specific situation and determine if a QLAC is the right fit for your retirement goals.