Final regulations - Minimum distribution rules for longevity annuity contracts purchased under certain retirement plans 

July 1:  The Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9673) concerning the purchase of longevity annuity contracts under tax-qualified defined contribution plans under section 401(a), section 403(b) plans, individual retirement annuities and accounts (IRAs) under section 408, and eligible governmental section 457 plans.

The 49-page final regulations [PDF 271 KB] finalize regulations proposed in February 2012 relating to the required minimum distribution rules, in order to facilitate the purchase of deferred annuities that begin at an advanced age.

Broadly, the final regulations:

  • Modify the required minimum distribution rules in order to facilitate the purchase of deferred annuities that begin at an advanced age
  • Apply to contracts that satisfy certain requirements, including the requirement that distributions commence not later than age 85 years
  • Provide that prior to annuitization, the value of these contracts—referred to as “qualifying longevity annuity contracts” (QLACs)—is excluded from the account balance used to determine required minimum distributions

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