Federal tax considerations for life insurance and annuities

Which of the following terms is used to name the nontaxed return of unused premium

Dividend

Which of the following best describes taxation during the accumulation period of an annuity

Taxes are deferred

An insured decides to surrender his $100,000 whole life policy the premiums paid into the policy added up to $15,000 at policy surrender the cash surrender value was $18,000 what part of the surrender value would be income taxable

$3,000

Who can make a fully deductible contribution to a traditional IRA?

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

When must an IRA be completely distributed when a beneficiary is not named?

December 31 of the year that contains the fifth anniversary of the owner's death.

The advantage of the qualified plans to employers is

Tax-deductible contributions

Which of the following best describes the tax advantage of a qualified retirement plan

The earnings in the plan accumulate tax deferred

What is the tax consequence of amounts received from a traditional ira after the money was left in the tax-deferred account by the beneficiary

income tax on distributions and no penalty

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

It is only taxable if the cash value exceeds the amount paid for premiums.

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

Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase

Withdrawn amounts are taxed on a last-in-first-out basis.

If taken as a lump sum, life insurance proceeds to beneficiaries are passed

Free of federal income taxation.

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government

Which of the following statements regarding the taxation of modified endorsement contracts is false

Withdrawals are not taxable