- A deferred income annuity converts a premium today into lifetime payments starting at a chosen future date — the longer the deferral, the larger the payment per dollar.
- A QLAC is a DIA inside an IRA or plan with a special power: its value is excluded from RMD calculations until payments begin, as late as age 85.
- QLAC premiums are capped by law — $200,000 under SECURE 2.0, indexed annually; confirm the current year's limit before funding.
- A contingent deferred annuity wraps a lifetime-income guarantee around assets you keep invested elsewhere — insurance unbundled from the account.
- Deferral means payments may never begin; return-of-premium death benefits soften that at the cost of a smaller payment.
Our immediate annuity guide covers income that starts now. This page covers the stranger, more powerful sibling: income that starts later — sometimes decades later — where a modest premium buys a startlingly large payment for one honest reason: you might not live to collect it. Three products run on that engine, and one of them can also quiet your RMDs.
A QLAC — qualifying longevity annuity contract — is the version of this product that lives inside an IRA or employer plan and removes its own value from your required minimum distribution calculation until payments begin.
The engine: mortality credits, stated plainly
An insurer pooling thousands of deferred-income buyers knows some will die before payments begin and others soon after. Their forfeited premiums fund larger payments for the survivors — mortality credits, the yield source no portfolio can replicate, because no portfolio is allowed to keep a dead investor's money.
The longer the deferral and the later the start age, the more powerfully this works: a premium at 65 buying income from 85 is cheap per dollar of income precisely because two decades of mortality stand between purchase and payment. That is not a defect in the pricing; it is the pricing, and every choice below is a negotiation with it.
The deferred income annuity
A DIA is structurally a SPIA with a waiting period: single premium now, lifetime payments beginning at a date you elect — commonly 5 to 20 years out. During the deferral there is typically no account value, no crediting statement, nothing to watch. You have bought a future income, full stop.
The uses sort by start age. A near deferral — retiring at 62, income elected from 67 — bridges a planned gap, often paired with delaying Social Security. A far deferral — income from 80 or 85 — is pure longevity insurance: it caps the length of retirement your portfolio must fund, converting an open-ended planning problem ("what if I live to 98?") into a closed one ("fund 65 to 85; the DIA takes it from there"). That reframing, more than the payment itself, is the product's genuine contribution to a plan.
The death-benefit election decides the product's character. Life-only maximizes income and forfeits everything at an early death. Return-of-premium or cash-refund versions repay heirs if you die first — and surrender a meaningful slice of the payment to do it. Neither is wrong; a buyer purchasing insurance should lean life-only, a buyer who cannot stomach forfeiture should pay for the refund knowingly rather than discover the trade at the kitchen table.
The QLAC: the DIA with a tax superpower
A qualifying longevity annuity contract is a DIA purchased inside an IRA or employer plan, conforming to IRS requirements — fixed (not variable or indexed), payments starting no later than 85, premiums within the legal cap. In exchange, the QLAC's value is excluded from the balance used to compute required minimum distributions until its payments begin.
Read that mechanically: money you have earmarked for late-life income stops generating forced taxable withdrawals at 73 and instead emerges, as intended, at 80 or 85 — taxed then, as ordinary income, when it arrives as the income it was always meant to be. For a retiree whose RMDs exceed spending needs, the QLAC is one of the very few levers that reduces the forced-distribution treadmill rather than merely enduring it.
The cap: SECURE 2.0 set QLAC premiums at $200,000, eliminated the old 25%-of-balance test, and indexed the limit annually — so the current year's figure sits above the statutory number and should be confirmed with your custodian before funding. Spousal QLACs and joint-life elections exist and interact with the cap per person; this is a purchase worth one phone call to a tax professional, made before the application rather than after.
And the redundancy note from our qualified-money guide applies with a twist: inside an IRA, an ordinary annuity's deferral is worthless — but a QLAC is the exception that earns its place, because its benefit is not deferral-as-taxes but deferral-as-RMD-relief, something the IRA cannot do for itself.
The contingent deferred annuity: the guarantee, unbundled
A CDA inverts the usual structure. Your assets stay where they are — a brokerage account, designated funds — and the insurer, for an ongoing fee, guarantees lifetime income if covered withdrawals ever deplete the portfolio. No premium handover, no annuity account: just the insurance, wrapped around money you keep.
Conceptually it is the GLWB rider divorced from the annuity chassis, and the same disciplines apply: the fee is a permanent drag whether or not the guarantee ever pays; the covered-withdrawal percentage defines the income; and the guarantee is only as good as the issuer, which puts carrier strength back at the center. The market remains small — few issuers, varied structures — but the design matters because it shows the actual product being bought in every income guarantee: not an account, but a promise. The CDA simply sells the promise à la carte.
Pricing the three honestly
Get quotes at two or three start ages, life-only and cash-refund both, from at least three carriers — deferred-income pricing disperses across carriers even more than SPIA pricing does, and the spread is free money for whoever collects the quotes. Anchor every quote against the same two questions: what does this payment cost per guaranteed dollar of late-life income, and what am I giving up if I die at every age between now and the start date? A quote sheet that answers both is a decision; one that answers neither is an illustration.
Frequently asked
Pricing longevity insurance for a specific age?
DIA and QLAC quotes vary widely by carrier and deferral length. Send your age, the start age you're considering, and the premium — we will pull competing quotes and the return-of-premium trade-off.
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