QLAC Limit 2026: $210,000 and the RMD of an Illiquid IRA

The 2026 limit, and how it got there

The number is in one sentence of Notice 2025-67, “2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living”: “The limitation on premiums paid for a qualifying longevity annuity contract under § 1.401(a)(9)-6(q)(2)(ii) remains $210,000.” The notice cites paragraph (q) of the regulation, not Q&A-17; the 2024 final regulations replaced the question-and-answer format.

Source: IRS Notices 2023-75, 2024-80 and 2025-67; Pub. L. 117-328, Division T, section 202 (govinfo.gov); 89 FR 58886 (July 19, 2024), preamble and 26 CFR 1.401(a)(9)-6(q)(4)(ii)(A).

Two details from the regulation matter for the size of the next change. The $200,000 base is indexed from the calendar quarter beginning July 1, 2022, and “the amount of any increment to the limit that is not a multiple of $10,000 will be rounded to the next lowest multiple of $10,000” (1.401(a)(9)-6(q)(4)(ii)(A)). So the limit moves only in $10,000 steps, and it stood still in 2024 and 2026.

On the 25% cap: the premise that SECURE 2.0 section 202 repealed it is right in effect but not in form. Section 202(a)(1) is an instruction that Treasury “shall amend” the regulation “to eliminate the requirement that premiums for qualifying longevity annuity contracts be limited to 25 percent of an individual's account balance”, effective for contracts purchased or exchanged on or after December 29, 2022; the regulation text itself changed with T.D. 10001 in July 2024. The Federal Register adds that the higher limits also apply to a contract bought before December 29, 2022 that was already a QLAC on that date, so it needs no exchange.

The rules that decide whether a contract is a QLAC

Source: 26 CFR 1.401(a)(9)-5, 1.401(a)(9)-6, 1.408-8 and 1.408A-6 (eCFR, current to October 6, 2026).

The start deadline in practice: an owner born on March 10, 1951 turns 85 on March 10, 2036, so payments must start by April 1, 2036 (our arithmetic from the regulation's wording). The regulation allows the Commissioner to change the age “to reflect changes in mortality” ((q)(4)(ii)(B)); Notice 2025-67 does not, so 85 stands for 2026.

How a QLAC lowers the RMD, age by age

The RMD is the December 31 balance of the year before, divided by the Uniform Lifetime Table divisor (26 CFR 1.401(a)(9)-9(c); IRS Publication 590-B (2025) works one example as “$4,065 ($100,000 ÷ 24.6)”). A QLAC in the IRA on that date is subtracted from the balance. The reduction is the premium divided by the divisor:

Source: 26 CFR 1.401(a)(9)-9(c), Table 2 (eCFR, current to October 6, 2026); division is our arithmetic. The CSV lists every age from 73 to 90.

Timing is the part articles skip. The rule counts the QLAC “held under the plan” in the balance at the last valuation date of the prior year (1.401(a)(9)-5(b)(1), (b)(4)). A premium paid in 2026 therefore leaves the 2026 RMD at the December 31, 2025 balance divided by the divisor, and the exclusion first shows in the 2027 RMD (our reading). If you must take the 2026 RMD anyway, the QLAC cannot be the way to avoid it.

A $1.2 million IRA with $500,000 you cannot sell

The reader this page is for holds a traditional IRA where a large sleeve sits in non-traded REITs, BDCs or partnerships. Take an owner turning 75 in 2026 with $1,200,000 at December 31, 2025: $700,000 in cash and listed funds and $500,000 in a fund that repurchases only a fraction of what is tendered. We hold the fund at $500,000 and assume it pays nothing to the IRA (every number below is our arithmetic and our assumption).

First, the size of the squeeze. The RMD is 1 divided by the divisor times the balance, so it is 4.07% of the balance at 75 and 8.20% at 90. The illiquid share at which one year's RMD equals the entire liquid part is 1 − 1/24.6 = 95.9% at age 75 and 91.8% at age 90. At about 42% illiquid ($500,000 of $1.2 million) there is no problem in year one: the 2026 RMD is $48,780.49 ($1,200,000 / 24.6) against $700,000 of liquid money. The problem is cumulative, because each RMD is paid from the liquid part while the illiquid part stays in the base.

Our arithmetic. Liquid part is the amount at the prior December 31, before that year's RMD; values are flat (0% growth), the QLAC premium is paid in 2026 after the RMD, and QLAC payments are not counted. With the liquid part growing 4% a year the first short years are 2044 without and 2040 with the QLAC (CSV).

Read it carefully. The QLAC lowers each RMD by about $8,300 to $8,900 a year in this example and, by design, pays nothing until it starts. Because the $210,000 premium has to come from the liquid sleeve, the liquid part is $210,000 smaller from 2026 on, and the first year in which the RMD is larger than all the liquid money arrives three years earlier, in 2038 instead of 2041 (four years earlier at 4% growth). The QLAC does not fix a liquidity gap before payments start; it trades a lump of liquidity now for lower RMDs and a payment stream later. What the stream is worth in this example we cannot say: no insurer rate is in a primary document we hold, and payments would start by 2036, a year the table above shows with only $93,212.87 liquid in the QLAC case. The payments would add to the cash but are not an RMD substitute for the IRA balance (our reading), so ask for the quoted payment at the start date, not an illustration.

The real trade-off

• You need liquidity to buy it. The premium is paid by the IRA to the insurer. The regulation sets no rule on the form of payment; whether an insurer takes anything other than cash from an IRA is a question for the insurer and your custodian (our reading). With a large share of the IRA in a fund that prorates, cash is the scarce thing.
• There is no way back after the required beginning date. No cash surrender or commutation, except a rescission right of up to 90 days from purchase ((q)(1)(iv)).
• Return of premium may lower the payment (our reading). A contract with a return-of-premium death benefit pays a non-spouse beneficiary the premiums minus payments received, and the regulation treats the non-spouse life-annuity percentage as 0 for it ((q)(3)(iii)(C), (q)(3)(v)). Without it, an owner who dies before or soon after 85 may leave the beneficiary nothing from that money. Which is better depends on health, family and the quote.
• Joint life. If your spouse is the sole beneficiary, the contract may pay the spouse up to 100% of your payment ((q)(3)(i)). A joint contract usually pays less per month than a single-life one for the same premium (our reading; compare quotes).
• Divorce after buying. Survivor benefits to a former spouse stay valid if the court order says so ((q)(3)(vii)).
• The RMD problem on the rest of the IRA is untouched. The illiquid fund still goes into your balance at its December 31 value. If a fund cannot satisfy your RMD, see how RMDs work when an IRA holds an illiquid asset, including taking the RMD from another IRA or in kind. A QLAC in a traditional IRA is not a Roth asset: converting it to a Roth IRA later ends QLAC status, and the premiums stop counting ((q)(4)(iii)(B)); for how a conversion is valued and taxed, see Roth conversion with illiquid IRA assets.

Where QLAC does not help

An IRA owner who wants to give to charity out of the IRA should compare a qualified charitable distribution from an IRA with illiquid assets, which also counts toward the RMD. An owner with a rental or LLC interest in a self-directed IRA faces valuation and prohibited-transaction rules covered in self-directed IRA real estate rules. A QLAC is also not available as a Roth IRA feature: for Roth IRAs there is no lifetime RMD to reduce (26 CFR 1.408A-6 A-14(d)).

We looked for a public, primary list of insurers' QLAC products with rates and found none: QLACs are insurance contracts sold through insurers and not filed as SEC offerings in the data we use, so we publish no product table.

What a reader can do with this

• Find your room. Add every premium you have paid for a contract intended to be a QLAC in any IRA or plan; the room is $210,000 minus that sum for 2026. Your custodian may rely on your written statement for premiums paid outside its IRA (1.408-8(h)(2)), so the count is yours to keep.
• Test the liquid pool, not only the RMD. Add up what you can actually pay yourself from the IRA over the next ten years (cash, listed holdings and tendered fund shares at the recent fill rate) before sizing a premium.
• Ask the insurer five things: the payment at your start date in dollars, whether it is return of premium, single or joint life, the form of payment it accepts, and the 90-day rescission period.
• Check the 2027 limit. Each year's limit comes in an IRS notice issued the year before (Notices 2023-75, 2024-80 and 2025-67); we found no 2027 notice as of October 20, 2026, so the 2027 figure may appear within weeks.

Frequently asked questions

This is analysis of public documents, not investment, legal or tax advice. Sources, read and saved on October 20, 2026: IRS Notices 2025-67, 2024-80 and 2023-75; 26 CFR 1.401(a)(9)-5, 1.401(a)(9)-6, 1.401(a)(9)-9, 1.408-8 and 1.408A-6 (eCFR, current to October 6, 2026); Pub. L. 117-328, Division T, sections 201 and 202 (govinfo.gov); Federal Register document 2024-14542, 89 FR 58886 (July 19, 2024); IRS Publication 590-B (2025). Worked examples, projections and the reading of the year of the first reduced RMD are our arithmetic and our reading; the build script is saved with the page.