SmokeSignals Logo Large


A new, liberating IRA option is available

By George M. Fox, Attorney

The Chutes and Ladders board game comes to mind when you’re trying to figure out how much you must take out of your IRAs, etc. at age 70½ and after. If you land here, you slide to there and take that much out.  If you get here, you go down the chute to there and take something else. 

But now there’s a ladder, an opportunity to let a significant part of your IRA keep growing. And it’s courtesy of the IRS.

(FYI: 70½ is no magic number. In 1889, Chancellor Otto von Bismarck decided Germany needed a government program for people who were disabled because of age. They used age 70 as the starting point. In the U.S., age 70 first appeared in the 1996 tax act. However, nobody seems to know where the “½” came from.  You can’t Google “59½ and 70½” and find out anything more than probably, some IRS employee just popped in the fractions one day.)

Anyway, here’s the new ladder: You can deflect a chunk of your IRA to as late as age 85. That chunk will not be counted when you figure out your Minimum Required Distribution (MRD). You can push the amount—and all the earnings on it—into the future.

The amount you can deflect is $125,000 or 25 percent of your retirement account balance, whichever is less.

Obviously this is a tool for those who don’t need or want the full Minimum Required Distribution. Now you have an IRS-sanctioned way to cut it back. And yes, this applies to any employer-sponsored, tax-deferring plan, including 401K’s, 403b’s, etc. (For the uninitiated: the MRD is the amount you must take out from your IRA, starting at age 70 ½ and in each year thereafter.)

Here’s an example. Let’s assume your retirement account has $800,000 in it and you’re age 70½:

If you did nothing, your Minimum Required Distribution would be $800,000 divided by IRS’ life expectancy number.

If you did this new deferral, then your Minimum Required Distribution would be $675,000 divided by IRS’ life expectancy number.

What happens to the $125,000 difference? It keeps growing tax-deferred.

Where it keeps growing tax-deferred is very important.  The money you defer has to go into a special type of annuity, called a “QLAC” (which stands for “Qualified Longevity Annuity Contract.”) The amount you defer becomes the one-and-only premium.

You can defer having to tap into this annuity until age 85, or you can decide on a younger age.  The QLAC can provide for a death benefit beyond the premium you put in, so you’re not going to lose that money. The amount you’ll get is guaranteed by the insurance company, too.

An IRS Bulletin gives this example: At age 70, an employee takes $100,000 from his or her IRA account to purchase a QLAC, which will pay benefits starting at age 85.  This would get you an annual income between $26,000 and $42,000.  Not too shabby.

You’re not stuck with age 85; and there are other options you can get in your QLAC. So it’s important that you compare the features available in different insurance companies’ QLACs.

So if you don’t need the full amount you’re required to withdraw from your IRA, have a ladder.

George Fox practices in Sandy Springs and Big Canoe, and is also Adjunct Professor in Emory Law School's Center for Transactional Law. Questions are welcome; reach him at This email address is being protected from spambots. You need JavaScript enabled to view it. or on Facebook. He also cautions that what's above is not legal advice, and you should seek professional advice before doing or not doing something based on this material. 

Newest Stories - News

Flu update

Flu continues to plague Georgia In its latest update the Georgia Department of Public Health (March...

North Georgia Calendar – March 13

Events for the week of March 13 St. Paddy’s Ladies concert–Saturday, March 17, 2 p.m. at...


Two events scheduled at Eagles Rest Eagles Rest Park on Mt. Oglethorpe will host two events...

Big Canoe Calendar for week of March 13

Events for the week of March 13 Atlanta Mandolin Concert–Sunday, March 18, 4 p.m. Big Canoe...

Job Fairs

Job Fair at Goodwill Career Center in Dawsonville HomeGoods is hiring for the new store at...

Downings named honorary chairs

Downings named honorary chairs of the Legacy Gala Sandy and Jeff Downing have been named honorary...

Big Canoe Calendar for week of March 6th

Big Canoe Calendar for week of March 6th Atlanta Mandolin Concert–Sunday, March 18, 4 p.m. Big...

Movie Shoot in Big Canoe

Sunshine, Camera, Action . . . The Swim Club, Lake Disharoon Beach, and Lake Trail were...

Water testing

Citizens group concerned about landfill polluting Etowah River Stop Trashing Forsyth and the Etowah, LLC is...

SSW News March 6

Utilities Inc. of Georgia meets with property owners The future of water rates in Big Canoe...

North Georgia Happenings – March 6

The Titan Winds Concert–Sunday, March 18, 3:30 p.m. Free. Community invited. Episcopal Church of the...

BCAR Dog - Grayson

Meet BCAR Dog Grayson The American Kennel Club describes the Australian Cattle Dog as always alert...

Dog Owners Life Expectancy Longer

Want to live longer? Buy a dog! Dog owners have a lower rate of heart disease...


Bill places amendment on November ballot to protect special purpose funds HR158 will allow Georgia citizens...

Job Fairs

Job Fairs scheduled throughout March in Dawsonville The Goodwill Career Center in Dawsonville will host a...



SmokeSignals Online
11293 Big Canoe
Big Canoe, GA 30143
PH: 770-893-1594

©2018 Big Canoe News