Retirees Can Move $210,000 From an IRA Into a QLAC and Delay RMDs on That Money Until 85. Almost Nobody Has Heard of It.

A little-known IRS-sanctioned move lets retirees shift up to $210,000 from a traditional IRA into a Qualified Longevity Annuity Contract and postpone required minimum distributions on that money until age 85. The 2026 ceiling remains at $210,000, unchanged from 2025, when indexing rules built into SECURE Act 2.0 first lifted the limit above the $200,000 statutory base. Despite that generous ceiling, QLACs remain one of the least-used tools in the entire retirement code. The reasons come down to eligibility, liquidity, and awareness.

What a QLAC Actually Does

A QLAC is a deferred income annuity purchased inside a qualified account, typically a traditional IRA. The Treasury created the structure in 2014 to solve a specific problem: retirees who wanted guaranteed income in their 80s were being forced to draw down the exact assets meant to fund it, because RMDs kick in at age 73 under current rules. Money placed in a QLAC is carved out of the RMD calculation entirely until payments begin, and the owner can defer that start date as late as age 85.

The practical effect for a 73-year-old with a sizeable IRA is immediate and concrete. Shifting $210,000 into a QLAC removes that entire balance from the RMD base, shrinking taxable withdrawals for more than a decade. In many cases, that reduction keeps the retiree below the IRMAA thresholds that trigger surcharges on Medicare Part B and Part D premiums, adding a second layer of savings on top of the deferred taxes.

Why the Timing Matters Now

QLAC payout rates move in step with long-term interest rates, and the yield curve is delivering the most generous annuity pricing since the strategy was introduced. The 10-year Treasury yield has climbed to approximately 4.96% as of mid-September 2026, approaching 5% for the first time since October 2023. That is a sharp rise from the 4.68% reading cited when this article was first published in August, and it translates directly into richer guaranteed income for retirees who lock in now.

The Federal Reserve held its target range at 3.5% to 3.75% at its July 29, 2026 meeting, though three regional presidents dissented in favor of a hike, and markets are pricing a 25-basis-point increase at the September 16 meeting. Sustained inflation pressure, including 12-month PCE running at 3.7% as of the Jackson Hole symposium in late August, is keeping longer yields elevated. For retirees purchasing a QLAC during this window, they are locking in payout rates that reflect where the curve stands today, not where it might settle after the Fed’s next move.

Who Actually Has the Balances to Use It

The QLAC ceiling is calibrated for households with meaningful IRA assets, which sharply narrows the eligible audience. Fidelity’s Q3 2025 analysis pegs the average Baby Boomer 401(k) at $267,900 and the average Boomer IRA at $257,002. Average balances for participants aged 70 and older sit around $250,000. Those figures are pulled upward by high earners, so the median retiree sits well below them.

The $210,000 limit represents a large portion of the typical Boomer’s entire retirement stash. In practice, QLACs make sense for families in roughly the top quarter of the wealth distribution, where setting aside that amount still leaves a comfortable cushion for unexpected expenses, tax bills, and everyday spending during the 12 or more years before income begins at 85. A married couple can each purchase a separate QLAC from their own IRA, sheltering up to $420,000 combined from the RMD calculation.

The Trade-Off Retirees Weigh

Northwestern Mutual’s 2025 Planning and Progress Study found that 51% of Americans think it is somewhat or very likely they will outlive their savings, and 35% have taken no steps to address that risk. The 2026 edition of the same study found nearly half of Americans still worried about outliving their money, underscoring how persistent the fear is across age groups. A QLAC directly addresses that concern by converting a lump sum into guaranteed income for life starting at 85, an age when cognitive decline and sequence-of-returns risk are the hardest to manage.

The cost is liquidity. QLAC premiums are irrevocable. Once the purchase closes, the money is gone from the IRA in any usable sense until income begins. Inflation is the other real concern: the 2027 Social Security COLA is tracking at 3.1%, and steady consumer price growth means a fixed QLAC payout starting 12 years from now will buy meaningfully less in real terms unless the contract includes a cost-of-living rider.

The Bottom Line

QLACs are not for everyone, and the reason almost nobody has heard of them is partly that the product only makes sense for a narrow slice of retirees: those with enough IRA assets that a $210,000 carve-out still leaves ample liquidity, high enough marginal tax rates that shrinking RMDs meaningfully lowers the annual tax bill, and a family history or health picture that points toward longevity.

Trimming the RMD base years before withdrawals begin is the same defusing exercise we walked through in a free guide to the first-year RMD tax bomb. With the 10-year Treasury yield closing in on 5%, the math behind a QLAC purchase is better right now than at virtually any point in the strategy’s decade-long history. The window will not stay open indefinitely, and the tool remains obscure mostly because the retirement industry has little financial incentive to market a one-time premium product that pays modest commissions compared with managed assets.

Editor’s note: This article has been updated to reflect that the $210,000 QLAC contribution limit was first set for 2025 and is unchanged for 2026, correcting an earlier statement that the limit rose from $200,000 in 2025. The 10-year Treasury yield has also been refreshed to approximately 4.96% as of mid-September 2026, up from the 4.68% figure cited at original publication, and the Federal Reserve’s target range has been clarified as 3.5% to 3.75%, with context on the pending September 16 rate decision added.

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