life exam quiz 6

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

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

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

December 31 of the year that contains the fifth anniversary of the owners death

which of the following terms is used to name the non taxed return of unused premium

Dividend

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

Modified endowment contract

Which of the following is NOT true regarding policy loans

Money borrowed from the cash value is taxable

which of the following statements regarding the taxation of modified endowment contracts is FALSE?

Withdrawals are not taxable

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

from trustee to trustee

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- when an immediate annuity is purchased with the face amount at death or with the cash value surrender

what is the main purpose of the seven pay test?

it determines if the insurance policy is a MEC

a policy owner cancels his life policy but instructs the insurance company to transfer the cash value of his life policy to an annuity. This nontaxable transaction is called

1035 exchange

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

50%