A Little-Known Way To Supercharge Your IRA

You are receiving this email because you signed up to receive Bob Carlson's free e-letter Retirement Watch Weekly, or you purchased a product or service from its publisher, Eagle Financial Publications. [Carlson's Retirement Watch Weekly] [Retirement Reports](www.retirementwatch.com/retirement-resources/) [Retirement Articles](www.retirementwatch.com/retirement-articles/) Brought to you by Eagle Financial Publications A Little-Known Way To Supercharge Your IRA by Bob Carlson Editor, [Retirement Watch]( 08/04/2024 SPONSORED [Zacks Reveals Its Top 5 Stocks]( [image]( Zacks has a proven track record for picking big winners. And now, our team of experts has hand-selected, from thousands of companies, the 5 stocks they predict they have outsized gain-potential NOW and in the coming year. Recent recommendations have climbed as high as +288%. In fact, our newest report could point to even bigger gains. These picks will surprise you and current market conditions could make our new recommendations even more profitable. This special arrangement is good for a limited time only. [I urge you to act now!]( [CLICK HERE...]( Fellow Investor, [Bob Carlson]Many people could achieve a couple of retirement finance goals by adding a qualified longevity annuity contract (QLAC) to their IRAs. Even if you never buy one, you should look at QLACs and know their advantages and disadvantages. (Qualified longevity annuity contracts were created in regulations issued by the IRS in 2014.) They’re an IRS-approved way to secure a lifetime stream of income from your IRA, ensuring you never run out of income during retirement. They also can reduce required minimum distributions (RMDs) for several years during retirement. Some people use them to fund long-term care that might be needed later in retirement. First off, what is a qualified longevity annuity contract, exactly? It's a special type of longevity annuity. A longevity annuity, also called a deferred income annuity (DIA), is a relatively new type of annuity, first issued in 2004. You deposit a lump sum with an insurer and receive a promise the insurer will pay a guaranteed lifetime stream in the future. You decide when the income payments will begin, within limits. Income payments from qualified longevity annuity contracts can start as early as 72 or as late as 85. The income payments are delayed for as little as two years or as many as 45 years (but no later than to age 85) after you buy the annuity. The later the income payments begin, the higher they will be. The longevity annuity ensures you won’t run out of income during your lifetime. You’ll always have income from Social Security (the inflation-adjusted longevity annuity almost everyone has) and the longevity annuity. A QLAC also reduces required minimum distributions in years before the income payments begin. Until the 2014 regulations, it wasn’t clear how RMDs should be computed when a longevity annuity was purchased by an IRA. To be safe, most insurers required income payments from a DIA to begin by age 70. The IRS resolved the issue in the 2014 regulations. The IRA balance invested in QLACs isn’t used to calculate your required minimum distributions until income from the QLAC begins or you turn age 85, whichever occurs first. Required minimum distributions are a major problem for many traditional IRA owners. The tax code forces them to take distributions each year after age 72, whether or not the income is needed. The distributions are calculated using life expectancy tables and are intended to drain the IRA over a person’s lifetime. A higher percentage of the IRA is distributed as the owner ages. In the owner’s late 70s and beyond the RMDs often greatly exceed the income the owner needs. The RMDs from a traditional IRA are included in gross income, so they create an income tax problem. Under the 2014 regulations, the amount invested in QLACs isn’t used to calculate RMDs, up to a total of $125,000 invested or 25% of your IRA balance, whichever is less. The $125,000 limit is indexed for inflation and is set at $145,000 for 2023. The $145,000 limit is calculated by aggregating all your IRAs. In other words, it is a per taxpayer limit, not a per-IRA limit. Whether you exceeded the 25% limit is determined by comparing the amount invested in QLACs to all your IRA balances at the end of the previous calendar year. Married couples apply the limits per person. Each spouse can invest up to $145,000 or 25% of his or her IRA in QLACs. Qualified longevity annuity contracts also can be purchased through participating 401(k) and similar plans and reduce RMDs the same way. The 25% limit applies to each plan, and the $145,000 limit is per person. [URGENT WARNING: Millions of Retirements Are At Risk]( [image]( Congress is spurring on the most dangerous retirement threat of the last 50 years. America’s top retirement researcher reveals the deadly truth behind this government move… Plus the ONLY way to fully protect your wealth in the coming months. [Click Here for the Full Story.]( [CLICK HERE...]( Some IRA advisors recommend that you determine how much to invest in QLACs and move that amount to a separate IRA. This can make it easier to show you didn’t exceed the QLAC limits. Many people would benefit from excluding up to 25% of their IRA balances from the RMD calculations, and they can do that for a period of time by buying QLACs with a portion of their IRAs. One strategy is to buy a ladder of qualified longevity annuity contracts. Under a QLAC ladder, you buy several different QLACs with the income beginning in different years. That way, the guaranteed income increases over time. You also can buy the QLACs in different years. The income payments will vary based on your age and interest rates in the years the QLACs were purchased. Some people use QLACs as a form of long-term-care insurance. They buy the QLACs early in retirement with payments to begin in their late 70s or later, when any need for long-term care is likely to arise. The QLAC income when coupled with Social Security makes it likely they’ll have enough income to pay for any long-term care. If the care isn’t needed, the QLAC income ensures they’ll never run out of money regardless of what happens with their investment portfolios. The QLAC income also supplements other income sources, restoring purchasing power lost to inflation. A strategy for younger IRA owners is to buy DIAs while in their 50s and schedule income payments to begin between ages 65 to 70, or whenever they plan to retire. This can generate more guaranteed lifetime income than waiting to buy an immediate annuity when you want the income to begin, according to calculations by Wade Pfau, a professor at The American College. A QLAC doesn’t have to be a use-it or lose-it asset. Most people believe you and loved ones don’t receive anything if you don’t live to the age when income distributions begin. But qualified longevity annuity contracts are more flexible. You can set up the QLAC to pay income to both you and your spouse until you both pass away, though your spouse didn’t contribute to your IRA. You also can set the QLAC to provide some income or a return of premiums to a beneficiary if you pass away prematurely. The amount of income from a QLAC is set and guaranteed when you buy the annuity, but you can add an inflation protection feature. Keep in mind that adding any of these features reduces the income you’ll receive compared to a QLAC without any of them. Request quotes with and without the features to determine which option makes the most sense for you. Once a QLAC is purchased, limited changes are allowed. Most insurers allow you to change to the date income begins one time. You also might be able to add money to the annuity, but a new income payout amount will be calculated for that contribution. Not all longevity annuities are QLACs. Your IRA can own a longevity annuity that isn’t a QLAC, but it won’t help reduce the RMDs. Any annuities issued before July 2, 2014, the effective date of the IRS regulations, aren’t QLACs. Not all longevity annuities issued after that date are QLACs. Be sure the insurer verifies an annuity is a QLAC and not a standard longevity annuity. Variable annuities, indexed annuities and other types of annuities also aren’t QLACs. You can’t own a QLAC in a Roth IRA. To a better retirement, [Bob Carlson] Bob Carlson Editor, Retirement Watch Weekly Editor’s Note: Brace yourself... because your retirement money is now at serious risk. It all has to do with a law on the books that's designed to eat away at Americans' retirement funds – quietly and efficiently. To learn what's at stake, [click here for my shocking video]( – along with my #1 strategy for keeping your nest egg where it belongs... with YOU. SPONSORED [[Important] Read Before Markets Open]( [image]( Do you feel like you could be better informed about upcoming market trends? Heading straight towards the next Fed meeting, anything could happen. So, it's crucial that you plan now and weigh the best decisions for your future. This next complimentary class will help you do that. We’ll cover the biggest movers in the market, and also… - S&P and major indices forecasts - NVDA tracker - Options strategies - Who’s poised to break out next Don’t miss this next session. This market is about to present some enormous opportunities, so [be sure to attend this live market forecasting session.]( [CLICK HERE...]( Want More Retirement Advice? Check out my website, [RetirementWatch.com](, where you’ll find hundreds of free articles covering every aspect of retirement planning. Popular Posts: [Nine Important Things to Know Before Contributing to an IRA]( [How to Help Children or Grandchildren Buy a Home]( [Building the Complete Estate Plan]( [Finding Higher Returns With Low Risk]( New to the Retirement Watch Community: SeniorResource.com Sadly, over 5 million older adults suffer elder abuse each year. Unless the signs of abuse are obvious, it can be difficult to recognize it. Worse still, the victim may be too afraid to speak out against their abuser. It’s important to be vigilant and learn to spot signs of elder abuse. And these guidelines will help you do just that! [Click here to learn more.]( About Bob Carlson: [Bob Carlson]Robert C. Carlson is the author of the books The New Rules of Retirement and Retirement Tax Guide, editor and investment director of the popular retirement newsletter, Retirement Watch, and editor of the free weekly e-letter, Retirement Watch Weekly. Bob is a frequent speaker at investment conferences around the country, and you can also hear Bob as a featured guest on nationally-syndicated radio shows, such as The Retirement Hour, Dateline Washington, Family News in Focus, The Michael Reagan Show, Money Matters and The Stock Doctor. About Us: Eagle Financial Publications is located in Washington, D.C. – only a few blocks from the Capitol. Our products have been helping investors build their wealth for several decades. Whether you’re a long-term investor or short-term trader, you’ll find the right strategy for you, including how to earn more steady income to spend now, preserve and grow your capital to enjoy later, and whatever other investment goals you have. 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