Purchase a Qualified Longevity Annuity Contract
Qualified Longevity Annuity Contracts (QLACs) are relatively new instruments that help retirees use annuities inside their retirement accounts. You can invest up to $130,000 or 25% of your balance from your IRA or 401(k) in QLACs.
Putting money in this special version of a deferred-income annuity can help you lower your RMD as well as your taxable income for the year. What’s more, you can invest money in the QLAC at any age and you’ll start receiving annual payouts at whatever age you prefer in the future. One thing to keep in mind is that the money in QLAC will not be tax-free forever. You will have to make annual payments from the QLAC no later than age 85, when they’re already included in your taxable income along with your other RMDs.
