The Department of Treasury is concerned that people are living longer and running out of assets before they die.
One tool available is the purchase of a longevity annuity, also known as a deferred income annuity. With this annuity, a person purchases the annuity at a younger age, typically between age 60 to 65, but benefit payments do not commence until later in life, typically between age 80 to 85. The benefit of the annuity is that people can utilize their other assets until that time, knowing that when they reach age 80 to 85, they are guaranteed a stream of income for the rest of their life from the annuity. To constitute a Qualified Longevity Annuity Contract (QLAC), the contract must provide, among other things, that distributions commence no later than the first day of the month following the person’s attainment of age 85.
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