559 / May an individual purchase a QLAC after the required beginning date (RBD)?

The Treasury Department answers this question by implication in revised Treasury Regulation Section 1.401(a)(9)-6, A-17(c)(v), which states that, for contracts permitting a set non-spousal beneficiary designation, “payments are payable to the beneficiary only if the beneficiary was irrevocably designated on or before the later of the date of purchase or the employee’s required beginning date.” Based upon this language, it is clear that an employee (in the case of a qualified plan) or IRA participant may purchase a QLAC after his or her RBD.

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Planning Point: The final regulations do not answer the following question: Can a QLAC in a qualified plan be converted to a traditional IRA?

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At this point in time, the answer to this question may depend upon the insurers’ administrative systems.