Description: The proposed regulations define a class of products known as “qualifying longevity annuity contracts” (QLACs), which are excluded from the account balance used to determine required minimum distributions. By exempting longevity annuities (up to a specified limit) from the RMD rules, it is hoped that it will provide individuals under defined-contribution plans the option to use an “affordable” portion of their account balance to purchase a longevity annuity. The proposed regulations apply to tax-qualified defined-contribution plans under section 401(a), section 403(b), individual retirement annuities and accounts (IRAs) under section 408, and eligible governmental section 457 plans.

Description: The rules governing the tax treatment of distributions from life insurance or annuity contracts are complex. Worse, the relevant IRC section, section 72, seems at times to be the product of a conspiracy in restraint of understanding.