Calculating 25% limit for QLAC purchase
My understanding is that the maximum QLAC one can buy inside a Traditional, SEP or SIMPLE IRA in 2019 is the sum of:
1) The balance on 12/31/2018 plus
2) Any contributions (for either tax years 2018 or 2019) made in 2019 before the date of QLAC purchase minus
3) Roth conversions in 2019 to date and minus
4) Any IRA withdrawals, including RMDs in 2019 to date.
Note: Contributions should be made at least one day before QLAC purchase, but conversions & distributions on the date of purchase should be counted.
Any appreciation of assets since 12/31/2018 are not included in calculating the 25% upper limit on purchasing a QLAC.
Note: TD Ameritrade allowed me to merge my Traditional and SEP IRAs. Scottrade would not. Can one add the balances of the three types of taxable IRAs together to calculate the 25% maximum for QLAC purchases ?
Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2019-03-22 01:58
The dollar limit for a QCD is 130k, so the 25% limit only applies if total non Roth IRA balances exceed 520k. All TIRA, SEP IRA and SIMPLE IRA balances as of 12/31/2018 are added together to determine the limit to which the 25% is applied. However, I am not finding any changes to the original QLAC Regs. which did not include any adjustments for distributions or contributions done after the end of the prior year. Your listed adjustments 2,3, and 4 are certainly logical, but where are you seeing that these are allowed on IRA accounts. Possibly they are allowed on qualified plans, but these are IRAs.