You've saved your money- ensure you have it when you need it   
New federal tax law allows a new option for retirement distributions

[February 3, 2015]  Saving for retirement is a goal that most people share. But what about the second part of the equation-using your income in retirement? How do you know how much to spend when you don't know how long you'll need it to last? You don't want to run out. ..but you also don't want to deprive yourself unnecessarily . A qualifying longevity annuity contract (QLAC) might be able to help.

A QLAC allows you to take some of the money and set it aside in a deferred income annuity QLAC. You can postpone withdrawing that money up until as late as age 85. It's easy to see the potential advantages of a QLAC for certain situations. In particular, it can help you feel confident that you won't outlive your retirement savings because you'll have a guaranteed income stream beginning later in life.

Required minimum distributions (RMDs) govern the amount of money that you have to remove from a traditional individual retirement account annually. RMDs are calculated based on life expectancy and amount of assets at a certain age.

You must begin to take a certain amount of money from your retirement savings vehicles no later than age 70. So you could potentially have to withdraw (and pay taxes on) money that you don't immediately need.

The QLAC is only available with a deferred income annuity, which is a contract that allows you to create a guaranteed income stream at some point in the future. The QLAC endorsement allows you to use a portion of your traditional IRA savings to fund a QLAC potentially helping to protect against longevity risk by creating a future guaranteed lifetime income that defers the required minimum distributions.

Total QLAC premiums are limited by the IRS to the lesser of $125,000, less any premiums you paid to any other QLAC or 25% of the total of all IRA balances, less any premiums you paid to any other IRA QLAC (excluding Roth IRAs) as of Dec. 31 of the year prior to purchasing the QLAC.

A QLAC is a new option based on federal tax changes written in 2014 and not every IRA Provider offers a QLAC . Check with your financial professional to see if the organization you work with has the option.

Your financial professional will also be able to determine if the QLAC is appropriate for your personal financial situation. QLACs are meant to maximize your future retirement income stream.

A QLAC can be a useful tool when allocating retirement assets and can help you have access to your retirement savings when you need it.

This article was prepared by Thrivent Financial for use by local area representative FR Linda L Aper. She has offices at 604 Broadway St., Ste.#4 in Lincoln and can also be reached at 217- 735-2253.

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