A 72-Year-Old Can Still Move Up to $210,000 Into a QLAC and Cut Next Year’s RMD by About $7,900. The Check Doesn’t Start Until 85, and Neither Does the Tax
Moving a chunk of IRA money into a QLAC can legally shrink next year's required withdrawal and delay the tax bill by over a decade, but the window to act in 2026 is narrow and the tradeoffs are real.
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A qualified longevity annuity contract, or QLAC, is a deferred income annuity purchased inside a traditional IRA or qualified plan that lets a retiree push a slice of their tax-deferred balance out of the required minimum distribution calculation and delay income until as late as age 85. For a 72-year-old with more IRA money than they expect to spend in their 70s, the 2026 rules create a narrow but concrete planning window worth running the numbers on.
How the $210,000 Limit Turns Into a Smaller RMD Next Year
Under SECURE 2.0, the lifetime QLAC premium cap is indexed for inflation, and for 2026 that ceiling sits at $210,000 per individual. Dollars moved into a QLAC are carved out of the IRA balance used to compute the following year’s RMD, which is where the tax-deferral benefit actually shows up on a tax return.
The IRS Uniform Lifetime Table assigns a divisor of 27.4 at age 72 and 26.5 at age 73. A 72-year-old who moves the full $210,000 into a QLAC before year-end removes that amount from the December 31 balance that drives the following year’s RMD. Divided by the age-73 factor of 26.5, the mechanical reduction in next year’s required withdrawal comes to roughly $7,925, or about $7,900 less that has to leave the IRA and land on a 1040 as ordinary income.
For a retiree in the 22% federal bracket in 2026, that shift trims federal tax on the RMD by roughly $1,740 for the year. The 22% bracket applies to single incomes over $50,400 and joint incomes over $100,800, covering many retirees with Social Security plus meaningful IRA withdrawals.
Why the Current Rate Backdrop Matters for the Payout Quote
QLAC income quotes are set by insurers using long-dated interest rates and mortality assumptions, so the yield environment at purchase carries into the check size 13 years from now. The 10-year Treasury yield closed at 4.95% on September 10, 2026, up from 3.97% on February 27, 2026, and the highest reading in the trailing 12 months. Meanwhile, the federal funds target upper bound is 3.75% as of September 12, 2026, down from 4.5% in mid-September 2025.
A higher long-end curve generally supports higher deferred-income annuity payouts than a lower one, though the Treasury yield is a benchmark, not the crediting rate. A retiree who wants to see whether the current backdrop matters can request quotes from multiple carriers on the same premium, age, and start date, then compare the guaranteed lifetime income figure directly.
What You Give Up to Defer the Tax to 85
The tradeoff for tax deferral is liquidity. Money placed in a QLAC generally cannot be withdrawn as a lump sum, cannot be reallocated to other investments, and does not participate in market returns after you pay the premium. Income can begin earlier than 85, but must begin no later than the first of the month after the 85th birthday, and every dollar that eventually comes out is taxed as ordinary income in the year received.
Inflation is the other consideration, as a level-payment QLAC purchased today pays the same nominal check in 2039 as in the first year of income. Some contracts offer a cost-of-living increase rider, which lowers the starting payout in exchange for annual step-ups. On the Suze Orman podcast, a listener framed the appeal of the strategy as concern about “income exceeding IRMAA brackets” once RMDs begin, a common trigger for higher Medicare Part B and Part D premiums that a QLAC can help manage by shrinking the taxable withdrawal in the interim years.
Who the Math Actually Fits
The strategy targets a specific profile: a retiree with IRA assets beyond near-term spending needs, other liquid savings to cover emergencies through the deferral period, family longevity, and enough taxable income in their 70s that RMD compression is worth paying for. A retiree who will spend the RMD dollars anyway gets little from the deferral, since the money leaves the IRA either as an RMD or as a QLAC payment later (we walked through how large pre-tax balances turn into a first-year tax bomb, and the moves that defuse it years early, in a free guide here).
Three items to price before committing: the guaranteed monthly income at age 85 on the intended premium, whether a return-of-premium death benefit is included (and what it costs in payout terms), and how the projected age-85 income interacts with expected Social Security, pension, and residual IRA withdrawals for IRMAA and bracket-management purposes.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
