An important new tool has been proposed for planners seeking to help their clients manage the pace of distributions from their retirement accounts and to ease their fears about outliving their life expectancy. In February, the IRS released proposed regulations about the establishment of "qualified longevity annuity contracts." The new rules will allow retirement account owners to purchase certain annuity contracts with a portion of their retirement assets that can then be excluded from their required minimum distribution calculations.
Annuity payments, which are the only distribution option available from these contracts, will be required to begin by the owner's 85th birthday. The primary purpose behind the creation of the contracts is to help taxpayers in hedging their longevity risk by making it easier for them to purchase certain annuities with their retirement accounts. Qualified longevity annuity contracts do not currently exist, and the rules and guidelines now being discussed are subject to change in the final version of the regulations.
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