Longevity insurance was recently blessed again by the IRS with its finalization of a regulation allowing the inclusion of an advanced-age lifetime-income option in retirement plans such as 401(k) plans and IRAs.
As discussed in my July 25 MarketWatch article, 6 Ways a New Tax Law Benefits a Sustainable Retirement, "longevity insurance" isn't an actual product that you can purchase from a life insurance carrier. It's instead a term that refers to a deferred lifetime fixed income annuity with an advanced age start date, typically 80 to 85.
In a nutshell, IRS' final regulation allows you to invest up to the lesser of $125,000 or 25% of your retirement plan balance in "qualifying longevity annuity contracts" (QLACs) provided that lifetime distributions begin at a specified date no later than age 85. Although the regulation leaves the door open for other types of fixed income annuities in the future, QLAC investment vehicles are currently limited to lifetime deferred income annuities, or DIAs.