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Another Tax-saving Strategy for Your Financial Planning Toolbox

At Storen Financial, our advisors, many of whom are also registered CPAs and EAs, focus on helping you build your portfolio and minimize your tax bill. We don’t just value strategies that help you save money when you withdraw on your retirement accounts. We also work hand-in-hand with you to develop a financial plan that reduces your short-term and long-term tax bills, and we do this by implementing methods fine-tuned to your specific situation. These methods not only focus on investments and stock portfolios but factor in elements such as Medicare, Social Security, legacy planning, and much more. The QLAC is just another one of the tools in our arsenal utilized to make sure you are not paying unnecessary tax now in addition to growing and preserving your money for later.


Read about the Qualified Longevity Annuity Contract (QLAC) and how it can lower your tax bill in this article.

Article from Forbes Advisor

A qualified longevity annuity contract (QLAC) is a type of annuity contract specifically designed to keep you from outliving your retirement savings. As a deferred annuity, QLACs provide you with a guaranteed stream of income later in life. In addition, they can help you reduce the retirement account withdrawals mandated by Congress, helping to defer some income taxes.

A QLAC is a deferred fixed annuity contract sold by insurance and financial services companies that you purchase with money from a retirement account, such as a 401(k) or an individual retirement account (IRA).

The qualified part of the name means the annuity has met the requirements set by the government for special treatment when purchased with retirement account funds. With 401(k)s and most IRAs, you also get preferential tax treatment—with an understanding that by age 72 to 75, depending on your birthday, you must begin withdrawing at least a minimum amount of money from the account every year and pay ordinary income tax on those withdrawals.

You can spend up to $200,000 of your retirement funds on a QLAC without it counting as a currently taxable withdrawal. You’ll only start paying taxes on that amount when your annuity payments begin.

Longevity alludes to the chief purpose of a QLAC: making sure you don’t outlive your money. You can buy the QLAC now and put off payments until as late as when you turn 85.

The annuity contract part of QLAC means you get a guaranteed stream of income. Your QLAC provider sends you regular income payments based on the amount you’ve deposited in the annuity, the percentage growth they guarantee and the date you want to start receiving payments. The longer you wait to start receiving income, the larger your payments will be.

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Have questions? Or interested in meeting with our Storen Advisory team? Click here to contact us now. Or click here to learn more about our Financial Planning Investment Services.


Blog by Greg Storen, MBA – President/CEO, Advisory Services Director

Learn more about Greg and the rest of the Storen Financial team here.


Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.