Exam

in life insurance policies, cash value increases

Grow tax deferred.

what is the main purpose of a seven pay test

It determines if the insurance policy is an MEC.

When would life insurance policy proceeds be included in the insured's taxable estate?

when there are any incidents of ownership at the time of the death

are with draws taxable

yes

what is the penalty for IRA distributions that are below the required minimum for the year

50%

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

50% tax on the amount not distributed as required

who can make a fully deductible contribution to a traditional IRA

an individual not covered by an employer-sponsored plan who has earned income

which concept is associated with "exclusion ratio"?

annuity payments

in a direct rollover, how is the money transferred from one plan to the new one

from trustee to trustee

When a benficiary recieves payments consisiteing of both principal and interest portions, which parts are tasble as income?

interest only

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

settlement option

what method is used to determine the taxable portion of each annuity payment

the exclusion ratio

Traditional IRA contributions are tax deductible based on which of the following

owners income

an annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur

the interest will continue to accumulate tax deferred