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                                                                                            Department of the Treasury
                                                                                            Internal Revenue Service
Instructions for Form 1098-Q

(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.
For the latest information about developments related to        • The contract provides that, after distributions under the 
Form1098-Q and its instructions, such as legislation enacted    contract begin, those distributions must satisfy the 
after they were published, go to IRS.gov/Form1098Q.             requirements of Regulations section 1.401(a)(9)-6 (other 
                                                                than the requirement that annuity payments commence on or 
Reminders                                                       before the required beginning date).
In addition to these specific instructions, you should also use • The contract does not make available any commutation 
the current General Instructions for Certain Information        benefit, cash surrender right, or other similar feature.
Returns. Those general instructions include information         • No benefits are provided under the contract after the death 
about the following topics.                                     of the employee other than the benefits described in 
• Who must file.                                                paragraph (c) of Q&A-17.
• When and where to file.                                       • When the contract is issued, the contract (or a rider or 
• Electronic reporting.                                         endorsement with respect to that contract) states that the 
• Corrected and void returns.                                   contract is intended to be a QLAC.
• Statements to recipients.                                     • The contract is not a variable contract under section 817, 
• Taxpayer identification numbers (TINs).                       an indexed contract, or similar contract, except to the extent 
• Backup withholding.                                           provided by the Commissioner.
• Penalties.
• Other general topics.                                           An employee includes the owner of an IRA (other than a 
                                                                Roth IRA), where applicable.
  You can get the General Instructions for Certain 
Information Returns at IRS.gov/1099GeneralInstructions or       Limitations on Premiums—Plans
go to IRS.gov/Form1098Q.                                        The premiums paid with respect to the contract on a date 
Continuous use form and instructions.         Form 1098-Q and   satisfy the limitations requirements if they do not exceed the 
these instructions have been converted from an annual           lesser of the dollar limitation of paragraph (b)(2) of Q&A-17 or 
revision to continuous use. Both the form and instructions will the percentage limitation of paragraph (b)(3) of Q&A-17.
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 
Online PDF fillable Copies B and C. To ease statement           and that is purchased for the employee under the plan, or 
furnishing requirements, Copies B and C of Form 1098-Q are      any other plan, annuity, or account described in section 
fillable online in a PDF format, available at IRS.gov/          401(a), 403(a), 403(b), or 408 or eligible governmental plan 
Forms1098Q. You can complete these copies online for            under section 457(b).
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 
account balance that is used to determine required minimum        For purposes of the dollar and percentage limitations on 
distributions. A QLAC is an annuity contract that is purchased  premiums, unless the plan administrator has actual 
from an insurance company for an employee under any plan,       knowledge to the contrary, the plan administrator may rely on 
annuity, or account described in section 401(a), 403(a),        an employee’s representation, made in writing or such other 
403(b), or 408 (other than a Roth IRA) or eligible              form as may be prescribed by the Commissioner, of the 
governmental plan under section 457(b), and that, in            amount of the premiums paid for any other contract intended 
accordance with the rules of application of paragraph (d) of    to be a QLAC, but only with respect to premiums that are not 
Regulations section 1.401(a)(9)-6, Q&A-17, satisfies each of    paid under a plan, annuity, or contract that is maintained by 
the following requirements.                                     the employer or an entity that is treated as a single employer 
• Premiums for the contract satisfy the requirements of         with the employer under section 414(b), (c), (m), or (o).
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

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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 
The premiums paid with respect to the contract on a date            valuation 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, 
the dollar limitation is an amount equal to the excess of           Death of Employee
$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.
Percentage limitation. The percentage limitation is an              If the employee dies before the annuity starting date, the 
amount equal to the excess of 25% of the total account              only benefit allowed (except as provided in paragraph (c)(4) 
balances of the IRAs (other than Roth IRAs) that an individual      of Q&A-17) is a life annuity payable to the surviving spouse 
holds as the IRA owner (including the value of any QLACs            where the annuity payment is not in excess of 100% of the 
held under those IRAs) as of December 31 of the calendar            annuity payment that would have been payable to the 
year immediately preceding the calendar year in which a             employee as of the date that benefits to the surviving spouse 
premium is paid over the sum of (1) the premiums paid               start. However, the annuity is permitted to exceed 100% of 
before that date on the contract, and (2) the premiums paid         the annuity payment that would have been payable to the 
on or before that date on any other contract intended to be a       employee to the extent necessary to satisfy the requirement 
QLAC and that is held or was purchased for the individual           to provide a qualified preretirement survivor annuity (as 
under those IRAs.                                                   defined under section 417(c)(2) or ERISA section 205(e)(2)) 
  For purposes of the dollar and percentage limitations on          pursuant to section 401(a)(11)(A)(ii) or ERISA section
premiums, unless the trustee, custodian, or issuer of an IRA        205(a)(2).
has actual knowledge to the contrary, the trustee, custodian,       Any annuity payable to the surviving spouse of an 
or issuer may rely on the IRA owner’s representation, made          employee who dies before the annuity starting date must 
in writing or in such other form as may be prescribed by the        start no later than the date on which the annuity payable to 
Commissioner, of the amount of premiums paid for any other          the employee would have started under the contract if the 
contract intended to be a QLAC and that are not paid under          employee had not died.
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 
If an annuity contract fails to be a QLAC solely because a          payable to the designated beneficiary where the annuity 
premium for a contract exceeds the limits under paragraph           payment is not in excess of the applicable percentage 
(b) of Q&A-17, then the contract is not a QLAC beginning on         (determined under paragraph (c)(2)(iii) of Q&A-17) of the 
the date that premium payment is made unless the excess             annuity payment that is payable (if the employee dies on or 
premium is returned to the non-QLAC portion of the                  after the annuity starting date for the contract) or would have 
employee’s account in accordance with paragraph                     been payable (if the employee dies before the annuity 
(d)(1)(ii)(B) of Q&A-17. If the contract fails to be a QLAC,        starting date) to the employee. For more information on the 
then the value of the contract may not be disregarded under         applicable percentage, see paragraph (c)(2)(iii) of Q&A-17.
paragraph A-3(d) of Regulations section 1.401(a)(9)-5 as of         When the employee dies before the annuity starting date, 
the date on which the contract ceases to be a QLAC.                 any life annuity payable to a designated beneficiary (other 
                                                                    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 
originally paid, then the contract will not be treated as           Multiple beneficiaries. If an employee has more than one 
exceeding the limits under paragraph (b) of Q&A-17 at any           designated beneficiary under a QLAC, the rules in paragraph 
time, and the value of the contract will not be included in the     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.

                                                                -2-                Instructions for Form 1098-Q (Rev. 12-2019)

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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 
If a QLAC is providing or will provide a life annuity to a          survived), you must file Form 1098-Q and provide a 
surviving spouse under paragraph (c)(1) of Q&A-17, it is also       statement annually to the spouse until the year in which the 
permitted to provide for a benefit paid to a beneficiary after      distributions to the spouse begin or the year in which the 
the death of both the employee and the spouse in an amount          spouse dies, if earlier.
equal to the excess of the premium payments made with 
respect to the QLAC over the payments already made under            Issuer's Name, Address, Telephone Number, 
the QLAC.                                                           and TIN Boxes
                                                                    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 
and is not eligible for rollover. See the Instructions for Forms    Account Number
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 
surviving spouse dies. If the surviving spouse’s death is after     Identification Number
the required beginning date for the surviving spouse, then the      If the contract was purchased under a plan, enter the name 
return of premium payment is treated as an RMD for the year         of the plan, the plan number, and the employer identification 
in which it is paid and is not eligible for rollover.               number of the plan sponsor.

Who Must File                                                       Box 1a. Annuity Amount on Start Date
Any person who issues a contract intended to be a QLAC              If the payments have not yet started, enter the amount of the 
that is purchased or held under any plan, annuity, or account       periodic annuity payable on the start date.
described in section 401(a), 403(a), 403(b), 408 (other than a 
Roth IRA) or eligible governmental plan under section 457(b),       Box 1b. Annuity Start Date
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
If you are required to file Form 1098-Q, you must furnish a         Box 2. Check if Start Date May Be Accelerated
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 
Certain Information Returns.                                        Box 3. Total Premiums
Truncating participant's TIN on payee statements.                   Enter the cumulative total amount of all premiums paid for the 
Pursuant to Regulations section 301.6109-4, all filers of this      contract through the end of the calendar year.
form may truncate a participant's TIN (social security number 
(SSN), individual taxpayer identification number (ITIN),            Box 4. FMV of QLAC
adoption taxpayer identification number (ATIN), or employer         Enter the fair market value (FMV) of the QLAC as of the close 
identification number (EIN)) on payee statements. Truncation        of the calendar year.
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         Boxes 5a Through 5l
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 

Instructions for Form 1098-Q (Rev. 12-2019)                      -3-