--- title: "SPIAs, DIAs, and QLACs: A Retiree's Guide to Income Annuities" source: https://www.perissosprivatewealth.com/insights/income-annuities-spia-dia-qlac-guide publisher: Perissos Private Wealth Management published: 2026-09-03T05:00:00+00:00 updated: 2026-09-03T05:00:03.972774+00:00 topics: income annuities, SPIA vs DIA, QLAC RMD rules, longevity risk management, guaranteed retirement income, Oklahoma financial planning license: Educational content. Cite with attribution. Not personalized financial, tax, or legal advice. --- # SPIAs, DIAs, and QLACs: A Retiree's Guide to Income Annuities ## Quick answer Income annuities provide guaranteed cash flow by exchanging a lump sum for periodic payments. A SPIA begins income immediately to cover current spending gaps, while a DIA defers payments to hedge future longevity risk. A QLAC is a specific DIA used within qualified accounts to defer income and manage required minimum distributions. ## Key takeaways - A Single Premium Immediate Annuity (SPIA) must begin making regular income payments within 13 months of the premium payment. - The IRS limitation on premiums paid for a Qualifying Longevity Annuity Contract (QLAC) is $210,000 for the 2026 tax year. - QLAC payments must commence no later than the first day of the month following the contract holder's 85th birthday. - Income annuities are generally irrevocable contracts that exchange liquidity for a guaranteed lifetime or period-certain payment stream. - The value of a QLAC is excluded from the account balance used to determine Required Minimum Distributions (RMDs) until annuitization begins. Income annuities are often discussed as if they are one product. They are not. A retiree considering guaranteed income usually has three timing choices: income now, income later, or qualified-account income later under the QLAC rules. Those choices point to three different tools: a single premium immediate annuity, a deferred income annuity, and a qualified longevity annuity contract. The right starting point is not the product name. It is the income problem. Do we need cash flow immediately? Do we want future income beginning in the retiree's 70s or 80s? Or are we trying to use part of an IRA or employer plan to hedge very late-life longevity risk while managing required minimum distribution exposure? ## The Basic Distinctions A single premium immediate annuity, often called a SPIA, is the plainest version. The retiree pays a lump sum to an insurance company and income begins immediately or soon after. FINRA describes immediate annuities as contracts where a lump-sum premium is exchanged for regular income payments, often starting within 30 days and always within 13 months. 1 A deferred income annuity, or DIA, moves the income start date into the future. FINRA describes DIAs as similar to immediate annuities with a delayed payout phase: the retiree pays money to the insurer, and the income begins at a predetermined future date. 2 The deferral is the point. The longer the delay, the more the contract is aimed at late-life income rather than current cash flow. A QLAC is a specific type of deferred income annuity purchased inside certain qualified retirement arrangements. IRS instructions for Form 1098-Q explain that, before annuitization, the value of a QLAC is excluded from the account balance used to determine required minimum distributions. The IRS instructions also state that QLAC payments must begin no later than the first day of the month after the employee's 85th birthday and that Roth IRAs are excluded from the eligible account list. 3 Figure 1 shows the practical timing distinction. A SPIA is an income-now decision. A DIA is an income-later decision. A QLAC is an income-later decision with specific retirement-account tax rules layered on top. Figure 1: Hypothetical income start-date timeline for SPIAs, DIAs, and QLACs. ## SPIA: Income Now A SPIA may fit when the retiree has an immediate gap between reliable income and essential spending. For example, Social Security and pensions may cover part of the monthly budget, but the household still needs a dependable base payment for housing, insurance, taxes, or basic lifestyle expenses. The appeal is simplicity. The retiree exchanges liquidity for a payment stream. Depending on the contract, payments may continue for one life, two lives, a period certain, or some combination. That can make budgeting easier and reduce portfolio-withdrawal pressure. The tradeoff is that the decision is usually hard to reverse. Capital committed to a SPIA is no longer available in the same way as a brokerage account, Treasury ladder, or bank reserve. Inflation can also matter. If payments are fixed, their purchasing power may decline over a long retirement unless the contract includes inflation protection, and that protection typically reduces the starting payment. ## DIA: Income Later A DIA can fit when the retiree does not need income today but wants a future income floor. It is often a longevity hedge for the period when portfolio management may become harder, health expenses may rise, or a surviving spouse may want a simpler income structure. The benefit of deferral is that the annuity can be targeted to a later-life risk. A retiree may prefer to self-fund the first decade of retirement with Social Security, cash reserves, bonds, and portfolio withdrawals, while using a DIA to begin income at age 75, 80, or another selected date. The tradeoff is commitment. FINRA notes that purchasing a DIA is generally an irrevocable decision and involves trading liquidity for the promise of future payout. 2 That makes the sizing decision critical. A DIA can help if it protects the right slice of retirement spending. It can hurt if it absorbs money the household later needs for taxes, health care, family support, housing, or flexibility. ## QLAC: Late-Life Income Inside Retirement Accounts A QLAC is narrower than a general DIA because it must satisfy specific tax rules. For 2026, IRS Notice 2025-67 states that the limitation on premiums paid for a qualifying longevity annuity contract remains $210,000. 4 The IRS Form 1098-Q instructions explain that QLACs can be purchased from certain plans, annuities, or accounts described in sections 401(a), 403(a), 403(b), or 408, other than a Roth IRA, or an eligible governmental 457(b) plan, if the contract satisfies the required conditions. 3 The planning appeal is that a QLAC can reserve part of the retirement account for late-life guaranteed income while excluding the QLAC value from the RMD account balance before annuitization. 3 For a retiree with large traditional IRA balances and a concern about living into the late 80s or 90s, that can be useful. But the QLAC is not free money and not a tax dodge. It is an income and longevity tool. Payments are delayed, liquidity is limited, the premium limit constrains sizing, and the future taxable income still needs to be coordinated with the broader plan. The IRS says required minimum distributions generally begin at age 73 for IRAs and many retirement accounts, and distributions are generally included in taxable income except for basis or qualified tax-free distributions. 5 The QLAC decision should be modeled alongside RMDs, Roth conversions, charitable giving, Medicare premiums, and survivor needs. ## Choosing Among Them The cleanest way to compare SPIAs, DIAs, and QLACs is to ask when the household needs the income. If the income gap exists today, a SPIA is the most direct tool. If the gap is expected later, a DIA may target the risk more efficiently. If the desired late-life income should be funded from a traditional IRA or eligible retirement plan and the household wants the QLAC treatment, the QLAC rules become relevant. The second question is whose life is being protected. A single-life payout may produce more income, but it can leave a surviving spouse exposed. A joint-life or survivor feature may lower the payment but better match the household's actual risk. The third question is what happens if the retiree dies early. Refund features, period-certain options, or death-benefit riders can protect heirs, but they generally reduce the income available to the retiree. That is not a flaw. It is the cost of keeping more value outside the mortality pool. ## Where Retirees Make Mistakes The first mistake is shopping payment quotes before deciding the role of the annuity. Higher quoted income is not automatically better if the contract starts at the wrong time, lacks the right survivor protection, or consumes too much liquid capital. The second mistake is ignoring inflation. A fixed payment may feel substantial at age 67 and much less substantial at age 87. Portfolio assets, Social Security cost-of-living adjustments, TIPS, cash reserves, or inflation-adjusted contract features may need to support purchasing power. The third mistake is confusing tax deferral with planning value. A nonqualified annuity, an IRA annuity, and a QLAC can have very different tax mechanics. IRS Publication 575 explains that pension and annuity distributions may be fully or partly taxable depending on the taxpayer's investment in the contract and other facts. 6 The after-tax income stream, not the brochure payment, is what matters. The fourth mistake is overlooking insurer risk. The SEC reminds investors that an annuity issuer's obligations depend on the insurer's financial strength and claims-paying ability. 7 Carrier due diligence is part of the planning decision, not a footnote after the sale. ## The Perissos View I think income annuities are most useful when the income start date is chosen first. For some retirees, that may mean no annuity at all. For others, it may mean a modest SPIA to stabilize the income floor, a DIA to cover later-life spending, or a QLAC to carve out traditional IRA dollars for very old age. The product should serve a specific role in the retirement-income architecture. The decision should be modeled with the rest of the plan: Social Security timing, pensions, portfolio withdrawals, RMDs, Roth conversions, tax brackets, Medicare premiums, long-term-care exposure, charitable goals, and estate liquidity. The client's CPA, attorney, and insurance professional should be involved when tax treatment, beneficiary designations, trust ownership, estate planning, or policy replacement issues are material. ## Closing The takeaway is simple: SPIA, DIA, and QLAC are timing tools. A SPIA solves for income now. A DIA solves for income later. A QLAC solves for qualified-account late-life income under specific tax rules. Once the timing problem is clear, the contract conversation becomes more disciplined. Without that clarity, the retiree is just comparing products before defining the job. All my best, Brandon VanLandingham, CFA, CMT, CFP ## Related Reading [Lifetime Gifting Strategies for Families With $10M+](/insights/lifetime-gifting-strategies-high-net-worth-families) [Mega Backdoor Roth: Is It Right for High Earners in 2026?](/insights/mega-backdoor-roth-is-it-right-for-high-earners-in-2026) [The 4% Rule Is Dead: What Replaces It in 2026](/insights/the-4-rule-is-dead-what-replaces-it-in-2026) ## Citations - FINRA, "Immediate Annuities: Money Now and for the Rest of Your Life ... for a Price," retrieved August 29, 2026, https://www.finra.org/investors/insights/immediate-annuities-money-now-and-rest-your-life. - FINRA, "Deferred Income Annuities: Plan Now for Payout Later," retrieved August 29, 2026, https://www.finra.org/investors/insights/deferred-income-annuities. - Internal Revenue Service, "Instructions for Form 1098-Q - Qualifying Longevity Annuity Contract Information," retrieved August 29, 2026, https://www.irs.gov/instructions/i1098q. - Internal Revenue Service, Notice 2025-67, "2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living," retrieved August 29, 2026, https://www.irs.gov/irb/2025-49_IRB. - Internal Revenue Service, "Retirement topics - Required minimum distributions (RMDs)," retrieved August 29, 2026, https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds. - Internal Revenue Service, Publication 575, "Pension and Annuity Income," retrieved August 29, 2026, https://www.irs.gov/pub/irs-pdf/p575.pdf. - SEC Investor.gov, "Annuities," retrieved August 29, 2026, https://www.investor.gov/introduction-investing/investing-basics/investment-products/annuities. ## Important Disclosures This piece is educational. It is not legal, tax, or accounting advice and is not a recommendation to take or refrain from any specific action. Tax law is fact-specific and changes regularly. Please coordinate any decisions discussed here with your attorney, your CPA, and Perissos before acting. Perissos Private Wealth Management is a Registered Investment Adviser ("RIA"). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Perissos Private Wealth Management renders individualized investment advice to persons in a particular state only after complying with the state's regulatory requirements, or pursuant to an applicable state exemption or exclusion. All investments carry risk, and no investment strategy can guarantee a profit or protect from loss of capital. Past performance is not indicative of future results. The information contained in this newsletter is intended to provide general information about market themes. It is not intended to offer investment advice. Investment advice will only be given after a client engages our services by executing the appropriate investment services agreement. Information regarding investment products and services is given solely to provide education regarding our investment philosophy and our strategies. You should not rely on any information provided in making investment decisions. Market data, articles and other content in this material are based on generally available information and are believed to be reliable. Perissos Private Wealth Management does not guarantee the accuracy of the information contained in this material. Perissos Private Wealth Management will provide all prospective clients with a copy of our current Form ADV, Part 2A (Disclosure Brochure), Part 2B (Supplemental Brochures), and Part 3 (Client Relationship Summary) prior to commencing an advisory relationship. You can also view these documents at any time at adviserinfo.sec.gov or by contacting us requesting a copy. ## Frequently asked questions ### What is the primary difference between a SPIA and a DIA? The primary difference is the timing of payments; a SPIA provides immediate income typically starting within 13 months, while a DIA defers payouts to a predetermined future date. ### How does a QLAC impact Required Minimum Distributions (RMDs)? A QLAC allows a retiree to exclude the value of the contract from their total account balance when calculating RMDs, provided the premium stays within IRS limits. ### Can I use a Roth IRA to purchase a QLAC? No, according to IRS instructions for Form 1098-Q, Roth IRAs are specifically excluded from the list of eligible accounts for QLAC purchases. --- Source: [Perissos Private Wealth Management](https://www.perissosprivatewealth.com/insights/income-annuities-spia-dia-qlac-guide) — fee-only fiduciary wealth management in Bethany, Oklahoma. 405.212.9690. This article is educational and is not personalized financial, tax, legal, or investment advice.