QLACs: Your Retirement Accounts Can Act Like Pensions

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QLACs: Your Retirement Accounts Can Act Like Pensions

Jun 30, 2025

These days, most people who work in the private sector don't have pensions, so they can only guess how long their retirement savings might need to last. Those who withdraw too much or live longer than expected could eventually run out of money; others may withdraw too little and live more frugally than might be necessary. A qualified longevity annuity contract (QLAC) is a special type of deferred income annuity purchased in an IRA or a qualified retirement account such as a 401(k). Lifelong income payments don't begin until the contract owner reaches an advanced age (up to age 85). The longer the payouts are deferred, the higher they will typically be. With a QLAC, retiring workers can use a portion of their tax-deferred savings to guarantee a certain income stream later in life — a time when they might have little or no ability to work and often face a greater risk of needing long-term care services.

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