You are probably thinking, what is all this alphabet soup and what is she talking about?

With the beginning of fall, now is a good time to rethink your retirement strategy, and I just wanted to mention a little-known fact that you may not know about.

While this may only impact a small amount of your retirement savings, it is something to consider.

The IRS has introduced approval of something called a qualifying longevity annuity contract (QLAC) that allows you to take a small piece of your retirement savings and place it in a special kind of annuity that you will use in your later years of retirement. 

This little piece of your retirement savings will be excluded from your calculation of the amount of your required minimum distributions (RMDs).

You will need to begin taking payments from this annuity no later than the first day of the month after you turn age 85.

The maximum amount you can invest is the lesser of $125,000 or 25% of your applicable retirement account assets.  The 25% limit will apply on an individual plan basis (except for IRAs), but the $125,000 limit is cumulative for all QLACs in all your retirement accounts.

For IRAs, the 25% limit applies to the prior year-end total of all of your IRAs (excluding Roth IRA accounts).

The limits apply on a person by person basis, so, if you are married, both you and your wife can set up your own accounts.

You cannot invest them in variable or equity-indexed annuity contracts, but you can ask for a contract with a cost-of-living adjustment.

You cannot get a cash surrender policy.  So, don't invest any money that you may want to take in a lump sum.

Your beneficiary can take the money in a lifetime income stream or a return-of-premium option.

Since these are new vehicles available, the insurance companies are in the process of developing products to meet these standards. 

So, this is just one more way to spread out your retirement distributions and lessen your required minimum distribution requirements.