Variable Annuities

<div class="Section1">If the annuitant's annuity starting date is after July 1, 1986, a deduction may be taken on the individual's final income tax return for the unrecovered investment in the contract remaining on the date of death.<a href="#_ftn1" name="_ftnref1">¹</a> Similarly, a refund beneficiary may deduct any unrecovered investment in the contract that exceeds the refund payment.<a href="#_ftn2" name="_ftnref2">²</a> For purposes of determining if the individual has a net operating loss, the deduction is treated as if it were attributable to a trade or business.<a href="#_ftn3" name="_ftnref3">³</a></div><br /> <div class="Section1"><br /> <br /> If an annuitant's annuity starting date was before July 2, 1986, there is no deductible loss; the view under the law at the time was that the annuitant had received all that the contract required.<a href="#_ftn4" name="_ftnref4">⁴</a> For example, no loss deduction was allowed where a husband purchased a single premium nonrefundable annuity on the life of his wife and his wife died before his cost had been recovered. The deduction was disallowed on the ground that the transaction was not entered into for profit.<a href="#_ftn5" name="_ftnref5">⁵</a> Legislatively, the denial of a deductible loss for unrecovered investment at death was viewed as a trade-off for the fact that exclusion ratio non-taxable payments also could continue beyond the point of fully recovering cost basis for contracts before July 2, 1986.<br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.     IRC § 72(b)(3)(A).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.     IRC § 72(b)(3)(B).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.     IRC § 72(b)(3)(C).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.     <em>Industrial Trust Co. v. Broderick</em>, 94 F.2d 927 (1st Cir. 1938); Rev. Rul. 72-193, 1972-1 CB 58.<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.     <em>White v. U.S.</em>, 19 AFTR 2d 658 (N.D. Tex. 1966).<br /> <br /> </div>

<div class="Section1">In general, a loss deduction can be claimed only if the loss is incurred in connection with the taxpayer&rsquo;s trade or business or in a transaction entered into for profit.<a href="#_ftn1" name="_ftnref1">¹</a> Fortunately, the purchase of a personal deferred annuity contract is typically considered a transaction entered into for profit. Consequently, if a taxpayer sustains a loss upon surrender of a deferred annuity contract, the taxpayer may claim a deduction for the loss as a loss on an investment (a transaction entered into for profit).<div class="Section1"><br /> <br /> The amount of the loss is determined by subtracting the cash surrender value (i.e., the net proceeds received after all final charges) from the taxpayer&rsquo;s &ldquo;basis&rdquo; for the contract. &ldquo;Basis&rdquo; is investment in the contract (e.g., premium paid, less any dividends received ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="515">515</a>) and the excludable portion of any prior annuity payments). The loss is an ordinary loss, not a capital loss (which means it does not have to be and should not be netted against capital gains).<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> While a deductible loss from an annuity is an ordinary loss, there has been a great deal of discussion about <em>where</em> a taxpayer should claim the loss on Form&nbsp;1040. Some say that the loss should be treated as a miscellaneous itemized deduction that is not subject to the 2&nbsp;percent- of-AGI floor on miscellaneous itemized deductions (all of which were suspended for 2018-2025 by the 2017 Tax Act). Others take a more aggressive approach and say that the loss can be taken on the front of the Form&nbsp;1040 on the line labeled &ldquo;Other gains or (losses)&rdquo; with supporting reporting on Form&nbsp;4797.<br /> <br /> <hr><br /> <br /> <strong>Planning Point:</strong> Although the IRS has not issued definitive guidance on the issue, it is notable that since 2009, IRS Publication 575 (Pension and Annuity Income) has stated the IRS position that a loss under a variable annuity is treated as a miscellaneous itemized deduction subject to the 2&nbsp;percent floor (however, as noted above, these deductions were suspended for 2018-2025).<a href="#_ftn3" name="_ftnref3">³</a> There is no apparent reason under the IRC and existing guidance as to why such a position by the IRS would not be upheld in court, if challenged, especially since as a standard rule any deduction not explicitly allowed elsewhere under the tax code is intended to be taken as a miscellaneous itemized deduction (and there is no other place in the tax code that affords special benefits to the deduction of losses for a nonqualified annuity).<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> <hr><br /> <br /> Notably, if the taxpayer purchased the contract for purely personal reasons, and not for profit, no loss deduction will be allowed. For example, in one case, the taxpayer purchased annuities on the lives of his relatives, naming his wife as the beneficiary of the contracts. Upon his wife&rsquo;s death, the taxpayer obtained consent from each of his relatives (the annuitants) and named himself as the new beneficiary. He later surrendered the contracts at a loss. The court disallowed a loss deduction on the ground that, even though he suffered a loss, the contracts were not bought for profit, but rather to provide financial security for his relatives.<a href="#_ftn5" name="_ftnref5">⁵</a><br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp;&nbsp;&nbsp; IRC &sect; 165.<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp;&nbsp;&nbsp; Rev. Rul. 61-201, 1961-2 CB 46; <em>Cohan v. Commissioner</em>, 39 F.2d 540 (2d Cir. 1930), <em>aff&rsquo;g</em> 11 BTA 743 (superseded on other grounds).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp;&nbsp;&nbsp;&nbsp; IRS Pub. 575 (2016), p.&nbsp;22.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp;&nbsp;&nbsp;&nbsp; IRC &sect; 67(b).<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp;&nbsp;&nbsp;&nbsp; <em>Early v. Atkinson</em>, 175 F.2d 118 (4th Cir. 1949).<br /> <br /> </div></div><br />

<div class="Section1">If an <em>irrevocable</em> grantor trust owns a deferred annuity and the grantor of the trust is not the annuitant, it is not clear whether payment of death proceeds will be triggered upon the death of the grantor or upon the death of the annuitant. The Code provides that the primary annuitant will be considered the "holder" of the contract if the owner is a non-natural person (e.g., a trust).<a href="#_ftn1" name="_ftnref1">¹</a> Therefore, many experts argue that it is the death of the primary annuitant that triggers annuity payout.</div><br /> <div class="Section1"><br /> <br /> Others disagree, and argue that it is the grantor's death that will trigger payout. This is because of the grantor trust rules, which treat the grantor of a trust and the trust itself as one individual for income tax purposes. Because the grantor is the owner of the trust assets for income tax purposes, many experts argue that the grantor should be treated as owner—or "holder"—for purposes of IRC Section 72(s). That said, this ambiguity applies only to deferred annuities owned by <em>irrevocable grantor</em> trusts. When the owner is a <em>revocable</em> trust, the grantor trust rules control (as the grantor is the "holder" for income tax purposes). Although that is also true when the trust is irrevocable and also a grantor trust, some authorities insist that the rule of IRC Section 72(s)(6)(A) controls, as the grantor of an irrevocable trust owning a deferred annuity does not have the unfettered control of that annuity contract that he would have were the trust revocable.<br /> <br /> At this point, the matter remains unresolved without any clarity or on-point guidance from the IRS.<br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.     IRC § 72(s)(6)(A)..<br /> <br /> </div>

<div class="Section1">A grantor trust can own a deferred annuity contract, but, in certain circumstances, the "non-natural person rule" of IRC Section 72(u) will cause the denial of the tax-deferral benefits to a deferred annuity owned by a trust. If annuity tax benefits are denied under the non-natural person rule, income on the annuity for any taxable year will be treated as ordinary income received.<a href="#_ftn1" name="_ftnref1">¹</a> However, if a trust owns a deferred annuity contract as the agent for a natural person, Section 72(u) does not apply.<a href="#_ftn2" name="_ftnref2">²</a></div><br /> <div class="Section1"><br /> <br /> A revocable grantor trust will usually fall within this exception because the grantor (presumably a natural person) and the grantor trust are treated as one "person" for income tax purposes,<a href="#_ftn3" name="_ftnref3">³</a> and, moreover, because the property is generally held in trust specifically <em>for</em> that grantor. More generally, as long as the grantor trust (a non-natural person) owns the deferred annuity contract, and the primary beneficiaries <em>of the trust</em> are natural persons, the annuity contract should escape the non-natural person rule of Section 72(u).<a href="#_ftn4" name="_ftnref4">⁴</a> If significant interests in the trust are held by non-natural persons, however, it is possible that the trust will not qualify as an agent for a natural person.<br /> <br /> It should be noted that most insurers require that when the owner of their deferred annuity contract is a trust, the trust must also be the primary beneficiary of that contract.<br /> <br /> If the grantor trust is irrevocable, determining whether the trust is exempt from the non-natural person rule becomes more complicated because the grantor of the trust might not retain any right to the trust assets or income. In making the determination whether significant interests in the trust are held by natural or non-natural persons, it is important to determine who will receive the primary economic benefit of the trust assets.<a href="#_ftn5" name="_ftnref5">⁵</a><br /> <br /> The IRS has ruled privately that deferred annuity contracts owned by an irrevocable grantor trust established by an employer-corporation (a non-natural person) were held for the benefit of natural persons (the employees) because (1) the employee-beneficiaries of the trust would receive all of the trust income and (2) the employer held no future interest in the trust assets.<a href="#_ftn6" name="_ftnref6">⁶</a> Therefore, even though the actual grantor of the trust was a non-natural person, the deferred annuity contract was able to escape the non-natural person rule because the beneficiaries were natural persons.<br /> <br /> Note that immediate annuities are explicitly exempted from the non-natural person rule of IRC Section 72(u).<a href="#_ftn7" name="_ftnref7">⁷</a><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.     IRC § 72(u)(1).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.     IRC § 72(u)(1)(B).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.     IRC § 671.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.     Let. Ruls. 9316018, 9120024.<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.     Let. Ruls. 200449011, 200449013, 200449014.<br /> <br /> <a href="#_ftnref6" name="_ftn6">6</a>.     Let. Ruls. 9316018, 9322011.<br /> <br /> <a href="#_ftnref7" name="_ftn7">7</a>.     IRC § 72(u)(3).<br /> <br /> </div>

<p> A qualified longevity annuity contract (QLAC) is a type of longevity annuity ("deferred income annuity") that meets certain IRS requirements that have been developed in order to encourage the purchase of annuity products with retirement account assets.<a href="#_ftn1">¹</a> A QLAC is a type of deferred annuity product that is usually purchased before retirement, but for which payouts are delayed until the taxpayer reaches old age. </p><p><hr></hr></p><p> <strong>Planning Point:</strong> Some commentators make a distinction between "longevity annuities" in regard to the annuity starting date (ASD). This is because some contracts specify a particular ASD, such as age 85, while others offer the purchaser a choice of ASDs. The former variety typically provides no pre-ASD death benefit and the latter may. </p><p><hr></hr></p><p> In the usual case, if a deferred annuity is held in a retirement plan, the value of that contract is included in determining the amount of the account owner's required minimum distributions (RMDs).<a href="#_ftn2">²</a> One of the primary benefits of a QLAC is that the IRS' rules allow the value of the QLAC to be excluded from the account value for purposes of calculating RMDs.<a href="#_ftn3">³</a> Because including the value of a QLAC in determining RMDs could result in the taxpayer being forced to begin annuity payouts earlier than anticipated if the value of his or her other retirement accounts has been depleted, the IRS determined that excluding the value from the RMD calculation furthers the purpose of providing taxpayers with predictable retirement income late in life.<a href="#_ftn4">⁴</a></p><p> Under the SECURE Act 2.0, plans may implement a "free-look period" of up to 90 days, during which the taxpayer can rescind the purchase of the QLAC without penalty. </p><p>The amount that a taxpayer can invest in a QLAC and exclude from the RMD calculation was limited, however, to the lesser of $145,000 (as adjusted for inflation in 2022, the amounts were $130,000 for 2018-2019 and $135,000 for 2020-2021) or 25 percent of the taxpayer's retirement account value.⁵Beginning in 2023, the limitations for QLAC investments was increased. It is $210,000 in 2025-2026 ($200,000 for 2023-2024).⁶The 25&nbsp;percent limitation was removed under the SECURE Act 2.0. The regulations clarify that a taxpayer is not required to exchange an existing QLAC for a new contract to take advantage of the higher dollar limitations. Taxpayers are permitted to add funds to an existing QLAC.</p><p><b>___________________________________________________________________</b><br/><b>Planning Point:</b> This is a per-person limit, meaning that a married couple in 2026 could potentially shelter $420,000 from RMDs via QLACs.<br/>______________________________________________________________</p><p> The 25&nbsp;percent limitation was removed under the SECURE Act 2.0. The regulations clarify that a taxpayer is not required to exchange an existing QLAC for a new contract to take advantage of the higher dollar limitations. Taxpayers are permitted to add funds to an existing QLAC.</p><p>Prior to the SECURE Act 2.0, final regulations provided that the 25 percent limit was based upon the account value as it existed on the last valuation date before the date upon which premiums for the annuity contract were paid. This value was increased to account for contributions made during the period that began after the valuation date and ended before the date the premium was paid. The account value was decreased to account for distributions taken from the account during the same period.⁷</p><p> To qualify as a QLAC, the annuity contract must also provide that annuity payouts will begin no later than the first day of the month following the month in which the taxpayer reaches age 85.<a href="#_ftn7">⁷</a> Variable annuities, indexed annuities and similar products may not qualify as QLACs unless the IRS specifically releases future guidance providing otherwise.<a href="#_ftn8">⁸</a> Further, a QLAC cannot provide for any commutation benefit, cash surrender value or similar benefit.<a href="#_ftn9">⁹</a></p><p> Taxpayers also have the option of choosing a joint payout option to benefit a surviving spouse or a lump sum distribution to beneficiaries if the QLAC payments are never needed. Once QLAC payments begin, the amounts are subject to ordinary income tax just like any other traditional retirement account distribution. </p><p> The SECURE Act 2.0 clarified that if the QLAC was purchased with joint and survivor annuity benefits for the individual and a spouse, and assuming that the contract was permissible under regulations in place at the time of purchase, a divorce occurring after the original purchase and before annuity payments begin will not impact the permissibility of the joint and survivor annuity benefits. Further, the divorce will not impact any other benefits under the contract (or require any adjustment to the amount or duration of the benefits). </p><p> That is the case provided that a qualified domestic relations order (QDRO) either (1) provides that the former spouse is entitled to the survivor benefits under the contract, (2) provides that the former spouse is treated as a surviving spouse for purposes of the contract, (3) does not modify the treatment of the former spouse as the beneficiary under the contract who is entitled to the survivor benefits, or (4) does not modify the treatment of the former spouse as the measuring life for the survivor benefits under the contract. </p><p> The 2024 final SECURE Act RMD regulations also provide guidance on situations where a QLAC is exchanged for another QLAC. The regulations provide that, for purposes of the limit on premiums used to purchase a QLAC, if another insurance contract is exchanged for a QLAC, the fair market value of the exchanged contract is treated as a premium paid for the QLAC. The final regulations also provide that if an insurance contract is surrendered for its cash surrender value, the surrender extinguishes all benefits and other characteristics of the contract, and the cash is used to purchase a QLAC, only the cash from the surrendered contract is treated as a premium paid for the QLAC. </p><p><hr align="left" size="1" width="33%"></hr></p><p> <a href="#_ftnref1">1</a>. 2012-13 IRB 598. </p><p> <a href="#_ftnref2">2</a>. Treas. Reg. § 1.401(a)(9)-6, A-12. </p><p> <a href="#_ftnref3">3</a>. IRC § 401(a)(9). </p><p> <a href="#_ftnref4">4</a>. 2012-13 IRB 598. </p><p> <a href="#_ftnref5">5</a>. 2012-13 IRB 598. </p><p> <a href="#_ftnref6">6</a>. Notice 2025-67, Notice 2024-80, Notice 2023-75, Notice 2022-55.</p><p> <a href="#_ftnref7">7</a>. Treas. Reg. §1.401(a)(9)-6, A-17(d)(1)(iii).</p><p>8. Treas. Reg. § 1.401(a)(9)-6, A-17(a). </p><p>9. Treas. Reg. § 1.401(a)(9)-6, A-17(a)(7). </p><p> 10. Treas. Reg. § 1.401(a)(9)-6, A-17(a)(4). </p>

<div class="Section1">The regulations answer this question by their focus: only QLACs are addressed within the regulations. IRA-held DIAs that are not QLACs are not governed by the new regulations. These regulations are additive in that they do not remove any of the previously existing rules that govern these types of annuity contracts. As a result, the regulations do not prevent a taxpayer from holding a non-QLAC DIA in a traditional IRA. In such a case, the previously existing method for determining RMDs for non-QLAC DIAs will apply.</div><br /> <div class="Section1"><br /> <br /> The actuarial present value [APV] (which may be referred to as fair market value [FMV]) is calculated and RMDs attributable to that value must be withdrawn from another IRA or through a commutation liquidation from the DIA contract itself. After the annuity starting date, the income payments from the DIA automatically satisfy the RMD requirement. No separate calculation is required.<br /> <br /> </div>

<div class="Section1">Whether death benefits of a deferred annuity (in particular, certain guaranteed minimum death benefits in excess of the contract&rsquo;s cash value) are triggered upon the death of the owner or the annuitant depends upon the terms of the contract. Some deferred annuity contracts are &ldquo;annuitant-driven&rdquo;, meaning that the contract will be paid out upon the death of the <em>annuitant.</em> These contracts will pay the death benefit (including any guaranteed minimum death benefit) upon the death of the annuitant.<div class="Section1"><br /> <br /> However, <em>all</em> deferred annuity contracts issued since January&nbsp;18, 1985,<a href="#_ftn1" name="_ftnref1">¹</a> must specify that if any &ldquo;holder&rdquo; of a deferred annuity contract dies before the contract enters payout status, the entire interest must be distributed within five&nbsp;years of the holder&rsquo;s death. Thus, <em>all</em> such contracts are &ldquo;owner-driven&rdquo; while only <em>some</em> are <em>also</em> &ldquo;annuitant-driven&rdquo;. Typically, the &ldquo;holder&rdquo; of the annuity contract is the owner of that contract, though if the annuity owner is a non-natural person (such as a trust or a corporation), the holder of the contract is the primary annuitant under the contract.<a href="#_ftn2" name="_ftnref2">²</a> See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="565">565</a>.<br /> <br /> In practical terms, this means that if a deferred annuity contract is &ldquo;annuitant-driven&rdquo; and provides for a guaranteed minimum death benefit in excess of the contract&rsquo;s cash value <em>and if the owner and annuitant are not the same person</em>, the cash value will be paid out if the owner dies first (ending the contract) and the guaranteed minimum death benefit will be paid out if the annuitant dies first. If a contract is not &ldquo;annuitant-driven&rdquo;, the death benefit will be paid out only upon the death of the <em>first</em> owner (&ldquo;holder&rdquo;). In that situation, if the annuitant dies first, the owner may generally name a new annuitant. If the owner and annuitant are the same person (the annuitant <em>must</em> be a human being), this question is moot.<br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp;&nbsp;&nbsp; IRC &sect; 72(s)(1)(B).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp;&nbsp;&nbsp; IRC &sect; 72(s)(6)(A).<br /> <br /> </div></div><br />

<div class="Section1">Yes. Insurance carriers have begun offering optional riders that can be attached to variable deferred annuity products in order to include the benefits of a deferred income ("longevity") annuity within the variable annuity. These deferred income annuities allow the contract owner to withdraw portions of the variable annuity itself in order to fund annuity payouts late into retirement.</div><br /> <div class="Section1"><br /> <br /> Taxpayers must purchase the rider at the time the variable annuity is purchased and can then begin transferring a portion of the variable annuity accumulation into the deferred income component as soon as two years after the contract is purchased. When the taxpayer begins making transfers into the deferred component, he or she must also choose the beginning date for the deferred payments.<br /> <br /> The deferral period can be as brief as two years or, in some cases, as long as 40 years, giving taxpayers substantial flexibility in designing the product to meet their individual financial needs. Further, taxpayers can choose to transfer as little as around $1,000 at a time or as much as $100,000 to build the deferred income portion more quickly.<br /> <br /> The deferred income annuity rider can simplify taxpayers' retirement income planning strategies in several important ways, not the least of which involves the ability to gain the benefits of both variable deferred and deferred income annuities within one single annuity package.<br /> <br /> This single-package treatment also allows taxpayers to avoid the situation where they wish to transition their planning strategies to eliminate the investment-type features common to variable annuity products into a product that allows for a definite income stream—a situation that commonly arises around the time when a taxpayer retires.<br /> <br /> Without the combination product, the taxpayer would traditionally be required to execute a tax-free exchange of the variable annuity contract for a deferred income annuity. Instead, the deferred income annuity rider allows the taxpayer to systematically transfer funds from the variable portion of the contract into the deferred income portion over time (though lump sum transfers are also permissible).<br /> <br /> </div>

<div class="Section1">A qualified longevity annuity contract (QLAC, see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="556">556</a>) may be held in a qualified defined contribution plan (such as a 401(k) plan), IRC Section&nbsp;403 plans, traditional IRAs and individual retirement annuities under Section&nbsp;408, and eligible IRC Section&nbsp;457 governmental plans.<a href="#_ftn1" name="_ftnref1">¹</a><div class="Section1"><br /> <br /> An annuity purchased within a Roth IRA cannot quality as a QLAC. If a QLAC is purchased under a traditional IRA or qualified plan that is later rolled over or converted to a Roth IRA, the annuity will not be treated as a QLAC after the date of the rollover or conversion.<a href="#_ftn2" name="_ftnref2">²</a> While it is true that an annuity purchased in a Roth IRA cannot qualify as a QLAC, it should not be assumed that a Roth IRA cannot purchase a longevity annuity. The final regulations do not prohibit this.<br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp;&nbsp;&nbsp; Treas. Reg. &sect; 1.401(a)(9)-6, A-17(b)(2).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp;&nbsp;&nbsp; Treas. Reg. &sect; 1.401(a)(9)-6, A-17(d)(3)(ii).<br /> <br /> </div></div><br />

<div class="Section1">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.<br /> <br /> <hr /><br /> <br /> <strong>Planning Point:</strong> The final regulations do not answer the following question: Can a QLAC in a qualified plan be converted to a traditional IRA?<br /> <br /> <hr /><br /> <br /> At this point in time, the answer to this question may depend upon the insurers' administrative systems.<br /> <br /> </div>