SECURE 2.0 changes to QLAC rules: what IRA holders can do now

The SECURE 2.0 Act, signed into law in December 2022, made several changes to Qualified Longevity Annuity Contracts (QLACs) that reshaped how IRA holders can use them. The expanded provisions are now part of standard QLAC products offered by major carriers.

The key SECURE 2.0 QLAC changes

Premium cap raised — $210,000 for 2026

Before SECURE 2.0, the QLAC premium limit was the lesser of (a) $145,000 (the last indexed pre-2023 figure, for 2022) or (b) 25% of your IRA balance. The Act removed the percentage cap and set a base dollar limit of $200,000, indexed for inflation each year — the 2026 cap is $210,000 (IRS Notice 2025-67). Because the limit is inflation-indexed, check the current year's figure with the IRS before you plan around a specific dollar amount.

For a retiree with a $400,000 IRA, this is a substantial change. Previously, they could only put $100,000 (25%) into a QLAC. Now they can put up to the full dollar cap ($210,000 for 2026) — more than doubling the RMD-deferred portion.

Income start date

You choose when QLAC income begins, up to a maximum start age of 85 — the latest the IRS allows (a limit set by the original 2014 rules, which SECURE 2.0 left unchanged). That deferral window is the core of the product: the later income starts, the larger the guaranteed check, and the premium stays out of your RMD calculation until payments begin.

Joint-and-survivor contracts and divorce

QLACs could already be written on a joint-and-survivor basis with a spouse under the original 2014 rules. SECURE 2.0 fixed a trap: if the couple later divorces, the contract keeps its QLAC status as long as a qualifying court order preserves the former spouse's survivor benefit. The Act also lets carriers offer a free-look period of up to 90 days.

Why this matters for retirement planning

For high-income pre-retirees with substantial IRAs, the expanded QLAC provisions enable several strategies:

1. Larger RMD deferral

The higher dollar cap means up to that amount of IRA balance can be carved out from RMD calculations until age 85. For a 65-year-old with a $1.5M IRA, deferring $210,000 takes RMDs off about 14% of the balance. Anyone 65 in 2026 was born in 1960 or later, so their RMDs start at 75, and that portion can stay out of RMD calculations for up to 10 years, until QLAC income begins (no later than 85). The money was already tax-deferred inside the IRA; what the QLAC adds is that RMD relief and a larger guaranteed income later, not an account balance that grows.

2. Coordinated Roth conversion strategy

Pairing a QLAC with Roth conversions can help spread taxable income more evenly across retirement; whether it lowers your lifetime taxes depends on your tax brackets now and later. Convert a portion of Traditional IRA to Roth (taxable today), park another portion in a QLAC (tax-deferred until 85), keep the rest invested in Traditional IRA (RMDs beginning at 73, or 75 if you were born in 1960 or later). The combination distributes tax liability across decades.

3. Spousal income coordination

A joint-and-survivor QLAC lets a couple protect both spouses' longevity with one contract, and since SECURE 2.0 that survivor benefit holds up even if the marriage later ends in divorce, provided the court order preserves it.

Major QLAC carriers

QLAC products are offered by several highly rated insurers, including:

• New York Life — A++ rated, joint life options
• MassMutual — A++ rated
• Lincoln Financial — A rated
• Pacific Life — A+ rated
• Mutual of Omaha — A+ rated

Payout rates vary meaningfully across carriers and move with interest rates over time, so always request current illustrations rather than relying on a stated figure. As a general rule, the longer you defer income, the larger the guaranteed payout. Compare quotes from at least three carriers before committing.

Tradeoffs to remember

QLACs are irrevocable once any free-look period ends: you can't cash one in or withdraw the premium. If you add a return-of-premium death benefit and die early, your beneficiaries get back any premium you haven't already received as income. Without one, an early death can mean little or nothing is paid out. Carrier insolvency is rare among A-rated insurers but remains a tail risk. Know your state guaranty fund limit per insurer — it is a capped backstop, not a substitute for the carrier's strength.

Also: the income deferred to 85 is fully taxable as ordinary income when it arrives. If you expect to be in a much higher tax bracket at 85, the strategy may not pay off — though most retirees expect lower brackets.

For deeper analysis, see our complete QLAC guide or retirement income calculator.