Utah · Retirement Income · 2026
QLACs in Utah: Turn IRA Money Into Guaranteed Lifetime Income at 85 — and Trim Your RMDs (2026)
The one retirement risk you can't diversify away is living a very long time. A QLAC is built for exactly that.
The bottom line
- A QLAC lets you move up to $210,000 of traditional IRA or 401(k) money into a deferred income annuity for 2026 (IRS Notice 2025-67).
- Income can start as late as age 85, and those dollars are excluded from your RMD math until it begins (IRS).
- It's longevity insurance: about 1 in 3 of today's 65-year-olds will live past 90, and 1 in 7 past 95 (Social Security Administration).
- The income is guaranteed by the insurer's claims-paying ability — not the markets, and not the government. Educational only, not advice.
If you're retiring in Utah, you've probably planned for the cost of care and for taxes on your withdrawals. The risk that's harder to plan for is simply living a long time — long enough that a portfolio built to last to 85 has to stretch to 95. A Qualified Longevity Annuity Contract, or QLAC, is a specific tool Congress built into the tax code to handle that risk: it converts a slice of your retirement account into guaranteed income that turns on late in life, and it quiets your required withdrawals in the meantime. Here's how it works, who it fits, and the 2026 numbers — with official sources.
What exactly is a QLAC?
A QLAC is a deferred income annuity purchased inside a traditional IRA or workplace plan. You hand the insurer a lump sum today, pick a future start date, and in exchange the company promises a set monthly income for the rest of your life once that date arrives. What makes it a "QLAC" — and not just any annuity — is a piece of IRS rule-making: the money you use to buy it is left out of your required minimum distribution calculations until the income starts. It's the only way under current law to push a portion of your tax-deferred savings past the normal RMD timeline.
How much can you contribute in 2026?
For 2026, you can put up to $210,000 into QLACs, counted across all of your traditional IRAs and eligible employer plans combined. That figure comes from IRS Notice 2025-67, released November 13, 2025, and is unchanged from 2025. The bigger change came earlier: the SECURE 2.0 Act removed the old rule that also capped QLAC premiums at 25% of your account balance, so today the flat dollar limit is the only ceiling.
Sources: IRS Notice 2025-67 — irs.gov/pub/irs-drop/n-25-67.pdf; Social Security Administration, life expectancy — ssa.gov.
Why longevity is the risk a QLAC is built for
Averages hide the real danger. Social Security's figures show a 65-year-old man today reaches age 84 on average and a 65-year-old woman about 86.7 — but "average" means half of people live longer. About one in three of today's 65-year-olds will live past 90, and about one in seven past 95. For a married couple, the odds that at least one spouse reaches their 90s are higher still. Planning your money to run out at your life expectancy is a coin flip you don't want to lose.
Longevity for today's 65-year-olds. Source: Social Security Administration — ssa.gov/benefits/retirement/planner/lifeexpectancy.html.
This matters in Utah even though the state skews young — just 12.2% of Utahns are 65 or older, versus about 18% nationally (U.S. Census Bureau). A smaller share of retirees can mean thinner local assumptions about how long money needs to last. And the back end of a long life is often the expensive end: a semi-private nursing-home room in Utah runs about $100,375 a year (CareScout 2024). Guaranteed income that switches on at 85 lands right when those bills tend to arrive.
Sources: U.S. Census Bureau QuickFacts, Utah — census.gov/quickfacts/UT; CareScout (Genworth) Cost of Care Survey 2024 — carescout.com/cost-of-care.
How a QLAC trims your required minimum distributions
Under SECURE 2.0, RMDs now begin at age 73 for people born from 1951 to 1959, and at age 75 for those born in 1960 or later (IRS). Each year's required withdrawal is your prior year-end account balance divided by an IRS life-expectancy factor. Here's the lever: dollars sitting in a QLAC are not part of that balance until QLAC income begins. Move $210,000 into a QLAC and your RMDs from 73 onward are calculated on a smaller account — a smaller forced withdrawal, and less added to your taxable income in those years. Utah taxes traditional-IRA withdrawals at its flat 4.45% rate, on top of federal tax, so a lower RMD can ease both bills.
| $210,000 in a traditional IRA… | Left in the IRA | Moved into a QLAC |
|---|---|---|
| Counts in your RMD balance at 73? | Yes — forces a withdrawal every year | No — excluded until income starts |
| When income can begin | Any time (you manage withdrawals) | A date you choose, up to age 85 |
| Longevity protection | None — the account can be depleted | Income for life, however long you live |
| Market risk on that money | Yes — value moves with investments | No — payout is set by contract |
RMD ages per SECURE 2.0. Source: IRS — irs.gov RMD FAQs. Utah income-tax rate: Utah State Tax Commission.
Who a QLAC fits — and who it doesn't
A QLAC tends to fit someone with a sizable traditional IRA or 401(k), good health and family longevity, and a worry about outliving savings or facing large RMDs they don't need yet. It's less useful if your retirement accounts are mostly Roth (Roth IRAs have no lifetime RMDs anyway), if you expect a short retirement, or if you'd rather keep every dollar liquid. The right amount is rarely the full $210,000 — it's the slice you can commit to guaranteed late-life income without straining your near-term cash flow.
The trade-offs to weigh
QLAC money is largely locked up — you generally can't take it back as a lump sum. The income you're quoted assumes you live to collect; death-benefit and spousal-continuation options protect against dying early but lower the payout. And because payments start years from now, inflation erodes their buying power unless you add a cost-of-living rider. None of this makes a QLAC good or bad — it makes it a tool that fits some retirement plans and not others.
We help Utah families weigh guaranteed income, RMD timing, and taxes in plain English — no pressure, no jargon.
Talk to a planner →Frequently asked questions
What is a QLAC?
A Qualified Longevity Annuity Contract (QLAC) is a deferred income annuity you buy inside a traditional IRA or 401(k). You set a future start date — as late as age 85 — and the insurer then pays you a set income for life. Because it is a QLAC, the money used to buy it is left out of your required minimum distribution (RMD) calculations until income begins (IRS).
How much can I put into a QLAC in 2026?
Up to $210,000 total across all your traditional IRAs and eligible employer plans, per IRS Notice 2025-67. SECURE 2.0 removed the old 25%-of-balance cap, so the flat dollar limit is all that applies.
How does a QLAC reduce my RMDs?
RMDs are figured on your prior year-end balance. Dollars moved into a QLAC are excluded from that balance until QLAC income starts, so your yearly required withdrawal — and the tax on it — is calculated on a smaller number in the meantime. Utah taxes traditional-IRA withdrawals at its flat 4.45% rate, so a lower RMD can mean a lower state and federal bill in those years.
When does QLAC income have to start?
You choose the start date when you buy it, and it must begin no later than the first of the month after you turn 85 (IRS). Many people set it at 80 or 85 so it arrives exactly when other savings may be running thin.
Is QLAC income guaranteed?
The income is contractually guaranteed by the issuing insurance company and does not rise or fall with the markets — but that guarantee depends on the insurer's claims-paying ability, not the government. This is educational information, not financial, tax, or legal advice; whether a QLAC fits depends on your health, other income, and goals.
What happens if I die before payments start?
It depends on the options you choose. Many QLACs offer a return-of-premium or cash-refund feature so a beneficiary receives the unused amount, and a spouse can often continue the income for life. These features lower the monthly payout, so it's a trade-off to weigh.
Sources
- IRS Notice 2025-67 — 2026 retirement plan limitations (QLAC $210,000): irs.gov/pub/irs-drop/n-25-67.pdf
- IRS — Required Minimum Distributions FAQs (RMD ages 73/75, 25% penalty): irs.gov RMD FAQs
- Social Security Administration — life expectancy for retirement planning: ssa.gov/benefits/retirement/planner/lifeexpectancy.html
- U.S. Census Bureau — QuickFacts, Utah (age 65+): census.gov/quickfacts/UT
- CareScout (Genworth) Cost of Care Survey 2024 — Utah: carescout.com/cost-of-care
About this article. Written by the Utah Retirement Income Data Desk and reviewed by Brian Penner, Retirement income & long-term care planner. Educational only — not financial, tax, or legal advice. Utah Retirement Income is a licensed independent insurance agency (NPN 16493717) and is not connected with any government agency. Annuity guarantees are subject to the claims-paying ability of the issuing company; there are no guaranteed investment returns, and product availability, features, and rates vary.