Filed Under:Annuities, Fixed Indexed

5 longevity annuity rules you need to know now

In recognition of the reality that many Americans will live well into their 80s, the Department of Treasury recently issued final rules making Deferred Income Annuities more accessible to those with good genes and perhaps inadequate savings.

The rules could be a game changer for how boomers, and their advisors, allocate 401(k) and IRA assets going forward.

defined contribution1. Defined contribution.

Defined contribution participants and IRA owners are now allowed to invest up to 25 percent of their account balances, or up to $125,000, in qualifying longevity annuity contracts, or QLACs.

longevity2. Longevity annuities

Longevity annuities will distribute cash at a set age, typically by 80 or 85.

IRS3. The IRS

What happens in the event that investors, and or their advisors, inadvertently distribute more than the 25 percent limit to a deferred annuity?

lump sum payment4. The Lump-sum

As far as the lump-sum goes:

cash value5. Cash value

Finally, there's the issue of cash value:

Originally published on ThinkAdvisor. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Nichole Morford

Nichole Morford
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