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Pacific Life Insurance introduces new solution for IRA owners

Published 07 April 2015

US-based Pacific Life Insurance Company has introduced a new solution for individual retirement account (IRA) owners, in a bid to save on taxes earlier in retirement and increase their guaranteed lifetime income payments at a later time.

Pacific

The company has launched a new qualified longevity annuity contract (QLAC), developed based on the US treasury regulations released in July 2014.

Pacific Life retirement solutions division marketing vice-president Christine Tucker said: "It can be a source of frustration for clients who would prefer the option to take a smaller distribution, because they may not need to take as much income as required early in retirement.

"Greater required minimum distribution amounts may bump retirees into a higher tax bracket. It can also affect the percentage of Social Security benefits exposed to taxation. For some, it may even increase the premiums they pay for Medicare Part B and D."

The regulations will allow an investor to allocate a portion of an individual's IRA to a deferred income annuity (DIA) that meets specific QLAC criteria.

According to Pacific Life, income from the annuity need not start until age 85 years and the DIA amount will not be included when calculating the investor's required minimum distributions (RMDs).

Established in 1868, Pacific Life offers a wide range of life insurance products, annuities, and mutual funds, in addition to different investment products and services to individuals, businesses, and pension plans.


Image: The headquarters of Pacific Life Insurance Company in Newport Beach, at Newport Center. Photo: courtesy of Coolcaesar.