Instructions for IRS Form 1098-Q "Qualifying Longevity Annuity Contract Information"

This document contains official instructions for IRS Form 1098-Q, Qualifying Longevity Annuity Contract Information - a tax form released and collected by the Internal Revenue Service (IRS), a subdivision of the U.S. Department of the Treasury. An up-to-date fillable IRS Form 1098-Q is available for download through this link.

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