QLAC Contribution Limits 2026: Using the $210,000 Limit to Defer RMDs to Age 85

You are 68 years old with $800,000 in a traditional IRA. Your first RMD is two years away, and you estimate it will push you into a higher tax bracket plus trigger IRMAA surcharges on your Medicare Part B premium. You also worry about living past 90 and depleting your savings. A qualified longevity annuity contract (QLAC) addresses both problems with one decision.

A QLAC is a deferred income annuity purchased with funds from a traditional IRA or 401(k) that delays required minimum distributions on those funds until age 85. The qlac contribution limits 2026 set a cap of $210,000 per person — the maximum amount you can allocate to this strategy, indexed for inflation under IRS Notice 2025-67.¹ This article explains how the limit works, how to size your QLAC within it, and how to coordinate the purchase with Social Security claiming and other retirement income sources.

How QLAC Contribution Limits Work for 2026

The IRS sets the QLAC contribution limit as a dollar cap rather than a percentage of your retirement account balance. For 2026, that cap is $210,000 per person.¹ This means you can transfer up to $210,000 from your traditional IRA, 401(k), 403(b), or other eligible retirement account into a QLAC without triggering a taxable distribution.

Two additional rules govern the limit. If your IRA balance is $500,000, your maximum QLAC contribution is $125,000 — even though the $210,000 cap is higher. Second, the limit applies per person, not per account. If you have three IRAs totaling $1.2 million, you still cannot exceed $210,000 across all QLACs combined.

The $210,000 figure is a lifetime limit. You cannot contribute $210,000 in 2026 and another $210,000 in 2027. Once you fund a QLAC, that allocation is permanent. The funds are no longer part of your IRA balance for RMD calculation purposes, but they are also no longer available for other withdrawals or investment choices.

Why Excluding QLAC Funds From RMD Calculations Matters

The core mechanical advantage of a QLAC is that the premium is excluded from your year-end IRA balance when calculating RMDs.² This creates a tax-deferral leverage effect on the full $210,000 contribution.

Consider a retiree with a $1 million IRA at age 73. Without a QLAC, the first RMD is approximately $37,700 (based on the IRS Uniform Lifetime Table factor of 26.5). If that same retiree had allocated $200,000 to a QLAC at age 68, the IRA balance subject to RMDs drops to $800,000, producing a first-year RMD of approximately $30,200.

The difference of $7,500 in annual distributions compounds over the 12 years until the QLAC begins paying income at age 85. The exclusion also reduces your adjusted gross income during the deferral years. Lower AGI means lower Medicare Part B and Part D IRMAA surcharges, which are assessed based on your tax return from two years prior.

For a retiree whose 2026 income determines 2028 Medicare premiums, a QLAC-funded reduction in 2026 AGI directly lowers 2028 monthly premiums.

Calculating How Much to Allocate to a QLAC

Determining the optimal QLAC contribution within the $210,000 limit requires projecting your RMD exposure across multiple tax years. The goal is to reduce RMDs enough to stay below IRMAA thresholds and marginal tax bracket cliffs, but not so much that you starve your pre-85 spending.

Suppose a married couple, both age 66, has combined traditional IRA assets of $1.5 million. They plan to claim Social Security at age 70, which will provide approximately $55,000 in annual benefits. Without a QLAC, their first RMD at age 73 would be roughly $56,600 on the full $1.5 million balance. Adding Social Security and other income, their AGI would exceed the 2026 IRMAA threshold for married filing jointly, triggering surcharges.

If each spouse allocates $150,000 to a QLAC — well within the $210,000 per-person limit — the combined IRA balance subject to RMDs drops to $1.2 million. The first RMD falls to approximately $45,300. Combined with Social Security, their AGI stays below the first IRMAA tier.

The $300,000 in QLAC premiums will generate lifetime income starting at age 85, covering longevity risk. The table below summarizes the comparison:

Timing QLAC Income Start at Age 85 vs Earlier

IRS regulations allow QLAC income payments to begin as late as age 85 and remain compliant under Section 401(a)(9).³ You can choose an earlier start date, but doing so reduces the deferral benefit.

The decision hinges on your projected spending needs between ages 73 and 85. If your non-IRA income sources — Social Security, pensions, part-time work — cover your expenses during this period, deferring QLAC income to age 85 maximizes the RMD reduction benefit. If you anticipate a spending gap in your late 70s or early 80s, starting QLAC payments at age 80 provides a bridge while still deferring beyond the standard RMD age.

A QLAC is not the same as a deferred income annuity purchased outside a retirement account. A deferred income annuity (DIA) bought with after-tax dollars does not reduce RMDs and does not have the $210,000 contribution limit. The QLAC's tax treatment is what makes it a distinct tool for RMD avoidance strategies among retirees.⁴

Spousal Strategies: Maximizing Both Partners' $210,000 Limits

The $210,000 QLAC contribution limit applies per person, not per household. A married couple with separate retirement accounts can each fund a QLAC up to $210,000, for a combined total of $420,000.⁵

This creates a meaningful planning opportunity. If one spouse has a larger IRA balance and faces higher RMD exposure, that spouse can allocate the full $210,000 to a QLAC. The other spouse can allocate a smaller amount or nothing, depending on their account size and income needs.

How QLAC Fits Within Your Overall Retirement Income Plan

A QLAC is one component of a broader withdrawal strategy. It works best when coordinated with Social Security claiming decisions, Roth conversion planning, and your portfolio's asset allocation.

For retirees aged 63-72, the years before RMDs begin are the optimal window for Roth conversions. Converting IRA funds to a Roth IRA at lower tax rates reduces future RMDs permanently. A QLAC complements this strategy by removing additional funds from the RMD calculation. The sequence matters: convert first, then allocate remaining IRA funds to a QLAC.

Social Security claiming age also interacts with QLAC timing. If you claim at 70, your maximum benefit provides a reliable income floor. The QLAC, starting at 85, covers the tail risk of a long retirement. Together, they create a layered income structure: Social Security (ages 70-85), portfolio withdrawals (ages 73-85), and QLAC income (age 85 onward).

The table below compares QLACs to other RMD deferral tools:

Common Mistakes Retirees Make With QLAC Allocations

The most frequent error is funding a QLAC too early, before completing Roth conversions. If you allocate $200,000 to a QLAC at age 65, those funds are locked into an annuity contract. You cannot later convert them to a Roth IRA. The optimal sequence is to convert the amount you want in Roth status first, then allocate remaining funds to a QLAC.

A second mistake is ignoring the 25% account balance rule. A retiree with a $400,000 IRA might assume they can contribute the full $210,000. The 25% rule limits them to $100,000. Checking this constraint before shopping for QLAC contracts prevents wasted effort.

A third error is purchasing a QLAC without comparing quotes from multiple insurers. QLAC payout rates vary by carrier, and the difference of 0.5% in annual income compounds over a 20-30 year payout period. The $210,000 limit is the same regardless of which insurer you choose, but the income you receive is not.

Your Next Step

Review your current IRA and 401(k) balances, then calculate your projected RMD at age 73 using the IRS Uniform Lifetime Table. Compare that figure against the IRMAA income thresholds for your filing status. If your projected RMD plus other income exceeds the first IRMAA tier, a QLAC allocation within the $210,000 limit may reduce your tax burden and Medicare premiums simultaneously.

Request quotes from three insurers offering QLAC contracts and compare the payout rates for a start date of age 85. Complete any Roth conversions you plan before funding the QLAC, since converted funds cannot be moved into an annuity contract. Document your decision with a written retirement income plan that shows how the QLAC fits with Social Security, portfolio withdrawals, and projected spending through age 95.

For personalized guidance on whether a QLAC fits your retirement income plan, consult the team at Smart Money After 60.