How do I include a QLAC in a plan?

A qualified longevity annuity contract (QLAC) is a deferred income annuity purchased with tax-deferred funds and subject to certain limits and rules around the purchase amount and age when income must begin. Modeling a QLAC in an Income Lab plan is easy.

If you are purchasing the QLAC soon, use the following steps.

1. Remove the QLAC purchase amount from the IRA account it will be purchased from. For example, if a $210,000 QLAC is being purchased from a $1 million IRA, reduce the IRA balance to $790,000.
2. Add an 'Other Income' item with the correct income amount, frequency, inflation treatment, and timing. Be sure to set the Tax Treatment to 'Ordinary'.

If you want to include a future QLAC purchase in the plan, use the following steps.

1. Use a custom account distribution plan to include a one-time distribution of the QLAC purchase amount from the correct account.
2. Add an other/variable expense item in the same amount in the same month
3. Add an 'Other Income' item with the correct income amount, frequency, inflation treatment, and timing. Be sure to set the Tax Treatment to 'Ordinary'.

Keep in mind that planning for future QLAC purchases involves estimating payout rates that may or may not be available in the future.