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Form 1098-Q Instructions

Instructions for Form 1098-Q, Qualifying Longevity Annuity Contract Information

Rev. December 2019

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  • Form 1098-Q - Qualified Longevity Annuity Contract Information
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Department of the Treasury  
Internal Revenue Service  
Instructions for Form 1098-Q  
Qualifying Longevity Annuity Contract Information  
(Rev. December 2019)  
Section references are to the Internal Revenue Code unless  
otherwise noted.  
The contract provides that distributions under the contract  
must commence no later than a specified annuity starting  
date that is no later than the first day of the month after the  
employee's 85th birthday.  
Future Developments  
The contract provides that, after distributions under the  
For the latest information about developments related to  
Form1098-Q and its instructions, such as legislation enacted  
after they were published, go to IRS.gov/Form1098Q.  
contract begin, those distributions must satisfy the  
requirements of Regulations section 1.401(a)(9)-6 (other  
than the requirement that annuity payments commence on or  
before the required beginning date).  
Reminders  
The contract does not make available any commutation  
In addition to these specific instructions, you should also use  
the current General Instructions for Certain Information  
Returns. Those general instructions include information  
about the following topics.  
benefit, cash surrender right, or other similar feature.  
No benefits are provided under the contract after the death  
of the employee other than the benefits described in  
paragraph (c) of Q&A-17.  
Who must file.  
When the contract is issued, the contract (or a rider or  
When and where to file.  
Electronic reporting.  
endorsement with respect to that contract) states that the  
contract is intended to be a QLAC.  
Corrected and void returns.  
Statements to recipients.  
Taxpayer identification numbers (TINs).  
Backup withholding.  
The contract is not a variable contract under section 817,  
an indexed contract, or similar contract, except to the extent  
provided by the Commissioner.  
Penalties.  
An employee includes the owner of an IRA (other than a  
Roth IRA), where applicable.  
Other general topics.  
You can get the General Instructions for Certain  
Limitations on Premiums—Plans  
Information Returns at IRS.gov/1099GeneralInstructions or  
The premiums paid with respect to the contract on a date  
satisfy the limitations requirements if they do not exceed the  
lesser of the dollar limitation of paragraph (b)(2) of Q&A-17 or  
the percentage limitation of paragraph (b)(3) of Q&A-17.  
Continuous use form and instructions. Form 1098-Q and  
these instructions have been converted from an annual  
revision to continuous use. Both the form and instructions will  
be updated if there are any adjustments to either the dollar  
limitations on Qualified Longevity Annuity Contract (QLAC)  
premiums or the age by which distributions under a QLAC  
must begin or on an as-needed basis. For the current  
version, go to IRS.gov/Form1098Q.  
Online PDF fillable Copies B and C. To ease statement  
furnishing requirements, Copies B and C of Form 1098-Q are  
fillable online in a PDF format, available at IRS.gov/  
Forms1098Q. You can complete these copies online for  
furnishing statements to recipients and for retaining in your  
own files.  
Dollar limitation. Effective for tax years beginning in 2020,  
the dollar limitation is an amount equal to the excess of  
$135,000 over the sum of (1) the premiums paid on the  
contract before that date, and (2) the premiums paid on or  
before that date on any other contract intended to be a QLAC  
and that is purchased for the employee under the plan, or  
any other plan, annuity, or account described in section  
401(a), 403(a), 403(b), or 408 or eligible governmental plan  
under section 457(b).  
Percentage limitation. The percentage limitation is an  
amount equal to the excess of 25% of the employee’s  
account balance under the plan (including the value of any  
QLAC held under the plan for the employee) as of that date  
over the sum of (1) the premiums paid before that date on the  
contract, and (2) the premiums paid on or before that date on  
any other contract intended to be a QLAC and that is held or  
was purchased for the employee under the plan.  
Specific Instructions  
File Form 1098-Q, Qualifying Longevity Annuity Contract  
Information, if you issue any contract that is intended to be a  
qualifying longevity annuity contract (QLAC). Prior to  
annuitization, the value of a QLAC is excluded from the  
account balance that is used to determine required minimum  
distributions. A QLAC is an annuity contract that is purchased  
from an insurance company for an employee under any plan,  
annuity, or account described in section 401(a), 403(a),  
403(b), or 408 (other than a Roth IRA) or eligible  
For purposes of the dollar and percentage limitations on  
premiums, unless the plan administrator has actual  
knowledge to the contrary, the plan administrator may rely on  
an employee’s representation, made in writing or such other  
form as may be prescribed by the Commissioner, of the  
amount of the premiums paid for any other contract intended  
to be a QLAC, but only with respect to premiums that are not  
paid under a plan, annuity, or contract that is maintained by  
the employer or an entity that is treated as a single employer  
with the employer under section 414(b), (c), (m), or (o).  
governmental plan under section 457(b), and that, in  
accordance with the rules of application of paragraph (d) of  
Regulations section 1.401(a)(9)-6, Q&A-17, satisfies each of  
the following requirements.  
Premiums for the contract satisfy the requirements of  
paragraph (b) of Q&A-17.  
For purposes of the 25% limit, an employee’s account  
balance on the date on which premiums for a contract are  
Nov 19, 2019  
Cat. No. 67096Y  
paid is the account balance as of the last valuation date  
preceding the date of the premium payment, adjusted as  
follows.  
employee’s account balance under paragraph A-3(d) of  
Regulations section 1.401(a)(9)-5.  
The account balance is increased for contributions  
If the excess premium is returned to the non-QLAC portion  
of the employee’s account after the last valuation date for the  
calendar year in which the excess premium was originally  
paid, then the employee’s account balance for that calendar  
year must be increased to reflect the excess premium in the  
same manner as an employee’s account balance is  
increased under paragraph A-2 of Regulations section  
1.401(a)(9)-7, to reflect a rollover received after the last  
valuation date.  
allocated to the account during the period that begins after  
the valuation date and ends before the date the premium is  
paid.  
The account balance is decreased for distributions made  
from the account during that same period.  
Limitations on Premiums—IRAs  
The premiums paid with respect to the contract on a date  
satisfy the limitations requirements if they do not exceed the  
lesser of the dollar limitation of paragraph (b)(2) of  
Regulations section 1.408-8, Q&A-12 or the percentage  
limitation of paragraph (b)(3) of Regulations section 1.408-8,  
Q&A-12.  
If the excess premium is returned to the non-QLAC portion  
of the employee’s account as described above, it will not be  
treated as a violation of the requirement that the contract not  
provide a commutation benefit.  
Dollar limitation. Effective for tax years beginning in 2020,  
the dollar limitation is an amount equal to the excess of  
$135,000 over the sum of (1) the premiums paid on the  
contract before that date, and (2) the premiums paid on or  
before that date on any other contract intended to be a QLAC  
and that is purchased for the IRA owner under the IRA, or  
any other plan, annuity, or account described in section  
401(a), 403(a), 403(b), or 408 or eligible governmental plan  
under section 457(b).  
Death of Employee  
Surviving spouse is the sole beneficiary. If the employee  
dies on or after the annuity starting date for the contract, the  
only benefit allowed to be paid (except as provided in  
paragraph (c)(4) of Q&A-17) after the employee's death is a  
life annuity payable to the surviving spouse where the annuity  
payment is not in excess of 100% of the annuity payment that  
is payable to the employee.  
If the employee dies before the annuity starting date, the  
only benefit allowed (except as provided in paragraph (c)(4)  
of Q&A-17) is a life annuity payable to the surviving spouse  
where the annuity payment is not in excess of 100% of the  
annuity payment that would have been payable to the  
employee as of the date that benefits to the surviving spouse  
start. However, the annuity is permitted to exceed 100% of  
the annuity payment that would have been payable to the  
employee to the extent necessary to satisfy the requirement  
to provide a qualified preretirement survivor annuity (as  
defined under section 417(c)(2) or ERISA section 205(e)(2))  
pursuant to section 401(a)(11)(A)(ii) or ERISA section  
205(a)(2).  
Any annuity payable to the surviving spouse of an  
employee who dies before the annuity starting date must  
start no later than the date on which the annuity payable to  
the employee would have started under the contract if the  
employee had not died.  
Surviving spouse is not the sole beneficiary. In this  
situation, the only benefit allowed (except as provided in  
paragraph (c)(4) of Q&A-17) after death is a life annuity  
payable to the designated beneficiary where the annuity  
payment is not in excess of the applicable percentage  
(determined under paragraph (c)(2)(iii) of Q&A-17) of the  
annuity payment that is payable (if the employee dies on or  
after the annuity starting date for the contract) or would have  
been payable (if the employee dies before the annuity  
starting date) to the employee. For more information on the  
applicable percentage, see paragraph (c)(2)(iii) of Q&A-17.  
Percentage limitation. The percentage limitation is an  
amount equal to the excess of 25% of the total account  
balances of the IRAs (other than Roth IRAs) that an individual  
holds as the IRA owner (including the value of any QLACs  
held under those IRAs) as of December 31 of the calendar  
year immediately preceding the calendar year in which a  
premium is paid over the sum of (1) the premiums paid  
before that date on the contract, and (2) the premiums paid  
on or before that date on any other contract intended to be a  
QLAC and that is held or was purchased for the individual  
under those IRAs.  
For purposes of the dollar and percentage limitations on  
premiums, unless the trustee, custodian, or issuer of an IRA  
has actual knowledge to the contrary, the trustee, custodian,  
or issuer may rely on the IRA owner’s representation, made  
in writing or in such other form as may be prescribed by the  
Commissioner, of the amount of premiums paid for any other  
contract intended to be a QLAC and that are not paid under  
the IRA, and the account balance of any other IRA.  
Consequences of Excess Premiums  
If an annuity contract fails to be a QLAC solely because a  
premium for a contract exceeds the limits under paragraph  
(b) of Q&A-17, then the contract is not a QLAC beginning on  
the date that premium payment is made unless the excess  
premium is returned to the non-QLAC portion of the  
employee’s account in accordance with paragraph  
(d)(1)(ii)(B) of Q&A-17. If the contract fails to be a QLAC,  
then the value of the contract may not be disregarded under  
paragraph A-3(d) of Regulations section 1.401(a)(9)-5 as of  
the date on which the contract ceases to be a QLAC.  
When the employee dies before the annuity starting date,  
any life annuity payable to a designated beneficiary (other  
than a surviving spouse) must commence by the last day of  
the calendar year immediately following the year of the  
employee's death.  
Multiple beneficiaries. If an employee has more than one  
designated beneficiary under a QLAC, the rules in paragraph  
A-2(a) of Regulations section 1.401(a)(9)-8 apply for  
purposes of paragraphs (c)(1) and (c)(2) of Q&A-17.  
If the excess premium is returned to the non-QLAC portion  
of the employee’s account by the end of the calendar year  
following the calendar year in which the excess premium was  
originally paid, then the contract will not be treated as  
exceeding the limits under paragraph (b) of Q&A-17 at any  
time, and the value of the contract will not be included in the  
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Instructions for Form 1098-Q (Rev. 12-2019)  
whose name the contract has been purchased for each  
calendar year beginning with the year in which the premiums  
for a contract are first paid and ending with the earlier of the  
year in which the individual in whose name the contract has  
been purchased reaches age 85 or dies. If the individual dies  
and the sole beneficiary under the contract is the individual's  
spouse (in which case the spouse's annuity would not be  
required to commence until the individual would have  
commenced benefits under the contract had the individual  
survived), you must file Form 1098-Q and provide a  
statement annually to the spouse until the year in which the  
distributions to the spouse begin or the year in which the  
spouse dies, if earlier.  
Return of Premiums  
In general, in lieu of a life annuity payable to a designated  
beneficiary under paragraph (c)(1) or (c)(2) of Q&A-17, a  
QLAC is permitted to provide for a benefit paid to a  
beneficiary after the death of the employee in an amount  
equal to the excess of the premium payments made with  
respect to the QLAC over the payments already made under  
the QLAC.  
If a QLAC is providing or will provide a life annuity to a  
surviving spouse under paragraph (c)(1) of Q&A-17, it is also  
permitted to provide for a benefit paid to a beneficiary after  
the death of both the employee and the spouse in an amount  
equal to the excess of the premium payments made with  
respect to the QLAC over the payments already made under  
the QLAC.  
Issuer's Name, Address, Telephone Number,  
and TIN Boxes  
Enter the name, address (including street address, city or  
town, state or province, country, and ZIP or foreign postal  
code), and telephone number of the entity with the filing  
requirement (issuer) in the box in the upper left corner. The  
telephone number must allow a participant to reach a person  
knowledgeable about the information reported on the form.  
A return of premium payment under paragraph (c)(4) of  
Q&A-17 must be paid no later than the end of the calendar  
year following the calendar year in which the employee dies.  
If the employee’s death is after the required beginning date,  
the return of premium payment is treated as a required  
minimum distribution (RMD) for the year in which it is paid  
and is not eligible for rollover. See the Instructions for Forms  
1099-R and 5498 for further information regarding rollovers  
and RMDs.  
Account Number  
The account number is required if you have multiple  
accounts for a recipient for whom you are filing more than  
one Form 1098-Q. Additionally, the IRS encourages you to  
designate an account number for all Forms 1098-Q that you  
file. See part L in the current General Instructions for Certain  
Information Returns.  
If the return of premium payment is paid after the death of  
a surviving spouse who is receiving a life annuity (or after the  
death of a surviving spouse who has not yet begun receiving  
a life annuity after the death of the employee), the return of  
premium payment must be made no later than the end of the  
calendar year following the calendar year in which the  
surviving spouse dies. If the surviving spouse’s death is after  
the required beginning date for the surviving spouse, then the  
return of premium payment is treated as an RMD for the year  
in which it is paid and is not eligible for rollover.  
Plan Number, Name of Plan, and Employer  
Identification Number  
If the contract was purchased under a plan, enter the name  
of the plan, the plan number, and the employer identification  
number of the plan sponsor.  
Box 1a. Annuity Amount on Start Date  
Who Must File  
If the payments have not yet started, enter the amount of the  
periodic annuity payable on the start date.  
Any person who issues a contract intended to be a QLAC  
that is purchased or held under any plan, annuity, or account  
described in section 401(a), 403(a), 403(b), 408 (other than a  
Roth IRA) or eligible governmental plan under section 457(b),  
must file Form 1098-Q.  
Box 1b. Annuity Start Date  
If the payments have not yet started, enter the annuity  
starting date on which the annuity is scheduled to start.  
Furnishing Statements to Participants  
Box 2. Check if Start Date May Be Accelerated  
Check the box if payments have not yet started and the start  
date may be accelerated.  
If you are required to file Form 1098-Q, you must furnish a  
statement to the participant annually. For more information  
about the requirement to furnish a statement to each  
participant, see part M in the current General Instructions for  
Certain Information Returns.  
Box 3. Total Premiums  
Enter the cumulative total amount of all premiums paid for the  
contract through the end of the calendar year.  
Truncating participant's TIN on payee statements.  
Pursuant to Regulations section 301.6109-4, all filers of this  
form may truncate a participant's TIN (social security number  
(SSN), individual taxpayer identification number (ITIN),  
adoption taxpayer identification number (ATIN), or employer  
identification number (EIN)) on payee statements. Truncation  
is not allowed on any documents the filer files with the IRS. A  
filer's TIN may not be truncated on any form. See part M in  
the current General Instructions for Certain Information  
Returns.  
Box 4. FMV of QLAC  
Enter the fair market value (FMV) of the QLAC as of the close  
of the calendar year.  
Boxes 5a Through 5l  
Enter the amount of each premium paid for the contract and  
the date of the premium payment.  
Manner and time for filing. You must file Form 1098-Q  
with the IRS and furnish a statement to the individual in  
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Instructions for Form 1098-Q (Rev. 12-2019)