The "accumulation period" lasts from contract issue until the
Annuity Starting Date (ASD), during which the "accumulation units" of the separate accounts chosen will vary in value (and the contract value, which is the sum of those units), as well.
A QLAC may offer a return of premium (ROP) feature that is payable before and after the
annuity starting date prior to age 85.
A QLAC may also provide a life annuity to a spouse who is the sole beneficiary of a participant who dies before his or her
annuity starting date.
While clients have the option of choosing an
annuity starting date that begins relatively quickly or far into the future with DIAs, these products often will allow the client to change the
annuity starting date that he or she originally chooses.
The IRS recently ruled that the income on the assets supporting a life insurance company's obligations under various deferred annuity products is not taxable to the annuity contract owners prior to the
annuity starting date because the life insurance company issuing the contracts possesses the requisite incidents of ownership in the assets and, therefore, owns the assets for tax purposes.
It is anticipated that an employee would use the bulk of his plan account, along with Social Security and any other resources, as retirement income until the delayed
annuity starting date.
will not be provided unless the participant and spouse have been married throughout the one-year period ending on the earlier of (A) the participant's
annuity starting date, or (B) the date of the participant's death.
an annuity that is purchased with a single premium or annuity consideration, the
annuity starting date of that is no later than one year from the date of purchase, and which provides for a series of substantially equal periodic payments to be made no less frequently than annually during the annuity period); or (5) is a qualified funding asset (as defined in IRC Section 130(d) but without regard to whether there is a qualified assignment).
The method used to determine the exclusion ratio depends upon the
annuity starting date.
However, if the
annuity starting date is after December 31, 1986, this exclusion ratio applies to payments received until the investment in the contract is fully recovered.
The method used for recovery of the cost basis depends on the participant's
annuity starting date.
Annuities with an
annuity starting date before 1987, can continue to use the exclusion ratio for recovery of basis even after the investment in the contract is fully recovered.
