The IRS released final regulations relating to the use of “qualifying longevity annuity contracts” (“QLAC”).  A QLAC is a special type of annuity contract under a tax-qualified defined contribution plan, such as a 401(k) plan, which provides a lifetime income stream starting no later than age 85.  Amounts held in a QLAC are exempt from the required minimum distribution rules of the Internal Revenue Code.  Pursuant to the final regulations, only up to the lesser of $125,000 or 25% of the participant’s account balance may be invested in a QLAC.  Additionally, a QLAC can have no cash surrender value.

The final regulations can be found here.