cfp continued

sole proprietors self employed

the IRS has ruled that premiums paid on an oerhead expense disablity policy that reimburses professionals r owner operators for overhead expenses actually incurred during periods of disability are deductible as a business expense and that the proceeds are taxable

sue has been asked to provide advice for a fee on a professional association votp. biu pit arrangement which IS accurate

the PA corp should select corss purchase arrangemetn to give the surviving officers a step up in basis, if the PA implements a redemption type entity buy out the life insurane proeeds would be tax free, cross purchase life insuracne policies may be subject to the transfer for value rule at the death of one of the officers if there are multiple owners, whether a corss purcahe or redemption method is chosed the premiums for the insurance are not deductible

other agency securities

the US gov does not directrly back these issues they are backed implicitly through lines of credit such as FHLB federal home loan bank, FNMA federal national mortgage association and FHLMC fderal home loan mortgage corp

corporations (regular and S corp)

the corp cannot deduct the premiums it pays but can exclude the insruance beenfits from its gross income. since the disability income is tax free deduction for the premium is not allowed.

modified endowment contracts

the internal revneue code defines a life insruance contract for income tax purposes. the policy must meet one of the following test to qualify: the cash value accumulation test or the guideline premiuma nd corridor test. toherwise it is classified as modified endowment contract and taxed like an annuity

nonforfeiture options

1. cash option (policy may be surrendered at any time for its cash value less any policy indebtness plus accumulaterd dividends) 2. reduced amount of (the face amount of the policy will be reduced the paid up insurance death ebenfit will be the amount the cash value would pruhcase as a net sigle premium no additional premium is due. 3. paid up term insurance (extended term) the policy may be continued in force for as aling as cash value will permit. no additional premiums are due. if the insured outlives the term, the policy stops. a tthe end of the term the cash value is zero.

example of CMO

CMo offers a to z tranches representing fast pay, medium pay and slow pay bonds plus an inssue (a Z tranche) that bears no coupon but receives the cash flow from the collateral remaining after the other tranches are satisfied

which security is subject to defauly risk

FNMA carries some deafault risk

MR. A is a 50% owner with Mr B in AB corp. they have a cross purchase buy sell agreement. how should Mr As life policy be structured if the corp is worht 1M?

Mr. B should own the policy and be its beneficiary 500k in the cross purchase

advantages of a pure life immediate fixed annuity

annuitant has a guaranteed stream of incoem no matter how long the annuitant lives. no residual value remains in the policy at the annuitants death that would be subject to estate taxes. this annuity has the highest payout among all the settlement options.

disadvanatages of a pure life immediate fixed annuity

annuitant receives a fixed payment (no inflaiton hedge);.; annuitant cannot commte the remaing value in other words the annuitant can't change his mind and ask for the principal back after his health changes. annutant may die before the return of entire principal is realized and nothing is left for the annuitants beneficaries. a fixed annuity payout can lose most of its purchasing power in 30-40 years

dividends paid

are generally treated as a return of unused premium and are not income taxable

buy sell agreements

arrangements for the sale of the individuals interest in a business due to death or disability. the agreeement can be structured under a stock redemption (entity purchase) or a cross purchase agreeemtn. both arrangements are typically funded by life insurance

Series HH Bonds

available only by excjanging at least $500 in Series EE bonds. they PAY interst semiannually (only by check) . they are NON MARKETABLE. after august 2004, EE bonds are no longer exchangeable into HH bonds. however, investors may still be holding previously issued HH bonds because they have 20 year maturities

high yield corp bonds

bond that has a rating of BB or lower and pays a higher yield to compensate for its greater risk also called a junk bond these are seldom a correct recommendation

cash value at time of surrnder

guaranteed cash value - loan existing

convertible bonds

hybrid debt securities. they pay interst. however the owner of the bond may convert the bond into a specific number of shares of the issuers common stock. the market price of the convertible security depends on both the value of the stock and the interest that the bond pays

if it is before 1988 the MEC rules do not apply

if he cashes in the policy he will have to declare the 40k as ordinary income

sidney purchased 250k niversal life policy in 1985 he is the named insured. he paid a lump sum and has decided to decrease the death benefit by 100k will the policy become a MEC

if the policy death benefit increases by any amoujnt and sidney had to provide additional evidence of insurability it may lose its grandfather status

which is true about TIPS

in any year when the principal value of the bond increases to do the inflation adjustment, the gain is reportable income. the increase in principal must be reported it is phantom income. TIPS pay a fixed interst rate. the fixed rate is applied to the inflation adjusted principal. the interst rate percentage is fixed. each semiannual payment applies 1/2 of that stated rate to the inflation adjusted principal. the inflation adjustment increases the basis of the bond. the interst received is taxable interst.

benefits of buy sell agreement

it guarantees a market for the business interest, it provides liquidity for the payment of death taxes and other estate settlement costs of the deceased owner, it helps establish the estte tax value of the decedents business itnerst, it enables the business to continue in the hands of the remaining owners, it makes a business a better credit risk,

pure life annuity

pure life or straight life annuity provides periodic benefit payments as long as the annuitant lives with the payments ceasing upon the death of the annuitant

taxation of whole life insurance

cash value above cost basis at the time of surender is taxed as ordinary income

is the I bond inflation adjustment subject to tax each year

the owner of the bond determines that. I bonds are taxed like EEs. the owner will generally choose to defer tax. rarely the owner recognizes tax in the current year.

which represents a characteristic of a Z tranche CMO

the yield should be higher than any other tranche because it has the longest duration of all the classes like a zero. it receives intesret and principal only after all other tranches have been liquidated. since it has the longest duration it will have the highest interst rate risk. because it is the last class to be paid, it receives a hgiher yield than the other classes

the inflation adjustment process

1st semiannual payment is 1k * the fixed coupon rate /2 because it is a semiannual payment. the second payment id new principal adjusted for inflationso half of the inlation for the year * 1000 then 1032.40 * fixed coupon rate /2 because seminanual)

Mr Bs basis in the business is 50k, if he becomes disabled the crop will redeem his stock for 500k. what amount of cap gains will mr b realize

450k. he will realize the redemption price less basis in capital gains

If AB has an entity purchase agreement how should the policy be structured

AB corp will be owner and beneficary for 500k

which is true about EE bonds and I bonds

Both EEs and I bonds are issued at full face value, both EEs and I bonds are backed by the full faith and credit of the united states and EEs are fixed income securities, I bonds are an inflation indexed accrual security. tax free redemptions of both EEs and I bonds can be used for qualified college education expenses. these bonds must be ownerd by an adult at least 24 years old, they cannot be held in a UTMA/UGMA custodial account and qualify for the interst exclusion. an UTMA/UGMA account is owned by the minor not the custodian. a grandparent may claim the interst exclusion if the student is a dependent of the grandparent.

which security is insured by directr guarantee of US gov

GNMA

GNMA governement national mortgage association

GNMA buys FHA, VA and farmers home admin insured mortggges from banks and places them into mortgage pools.it then issues pass through certificates representing indiv intersts in teh pool. GNMAs are a direct guarantee of the US gov. however because they are not issued by the treasury, GNMA interst is taxable at federa, state, and local levels. the min size of an indiv GNMA certificate sold to an indiv investor is 25k.

unifoorm simulataneous death act

USDA provides that any persons who dies within 120 hours of each other by law predescease each other. this rule keeps the propeorrty of onie deceased person from passing thourhg the estate of another deceased person before passing to those who survive both

if a single premium policy is purchased after 1988

a distribution or loan would be taxed as ordinary income plus 10% penalty if under the age of 59.5

indenture

a formal agreement also called a deed of trust is between an issuer o bonds and the trustee, the indenture contract also provides for the appointment of a trustee to act on behalf of the bondholders. the agreement covers the following: - form of bond (coupon or zero) -amount of the issue -property pledged (if not a debenture issue) -protective covenant,including any provision for a sinking fund -working capital and current ratio -redemption rights or call, put or conversion provisions

inez bought a TIPS 6 years ago for 1k. since then it has paid 180 in intesrt and has increased in principal by 300. if inez sells the security for 1400 what must he report to the IRS.

a gain of 100 because interst is taxable to the holder when received. any increase in the inflation adjusted prinicpal amount is treated as OID (taxable) basis is 100 + 300 = 1300(the increase in prinicpal)

spouses/children

a gift of a policy to a family member causes a taxable gift but not a trasnfer for value because no consideration is received

material change

a policy that at first passes the 7 pay test when issued can later become a MEC if there is a material change in the policy . a material change is any increase in the death benefit under the contract

bond investment value

a securitys intrinsic value is the present value of its expected cash flows. since these cash flows occur in the future, they must be discounted at an appropriate rate to determine their present value. payment of interst (coupon rate times par) is a positive input because the bondholder receives the interset

lucys landscape architects regularly incurs 8k per month in overhead expense. her S corp should do which of teh following to cover those expenses:?

acquire a business overhead policy to cover the overhead expense 8k but not deduct the premium. BOE premiums paid by a corp are not deductible. business overhead insurance cannot cover or pay for the owners salary it is just for business expenses of the entity.

key employee life insurance

acquired to protect an employer against economic loss from death ofa valued employee. the business should be the owner and beneficiary of key employees lfe insurance. the premiums for key employee insuarance are nondeductible while the death benefits are tax free.

split dollar plan

arrangement under which an emplolyer and an executive share costs and benefits of a life insurance policy. there are two methods of split dollar 1. endoRsement method- the employer owns the policy and has the responsibility for premium payment. the employers share of the beenfits is secured through its ownership of the policy. a beneficiary is named to receive the employees share of the death proceeds. 2. the collateral aSSighment method- the isnured employee is the policy owner. the corp lends the employee the corp share of the annual premium and the loan amonts are secured by the assignement of the policy to the corp. the corp receives its beenfits as assignee of the policy at the earlier of the enmpolhees death or termination of the split dollar plan

collaterized mortgage obligations

bc principal repayments vary as homeowners refinance homes, the amount of principal repayment received by the investor changes every month. CMOs collaterized mortgage obligations were developed to eliminate these risks. CMOs do not view mortgage pools as a means of passing through payments to certificate holders in exactly the same form as received. instead, the mortgage payments received are looked at on a cash flow basis. based on the basis of exepcted cash flow to be received over the life of the pool, separate classes of securities called tranches (french for "slices" are created. CMOs are multiclass pass through securities.

investment grade bonds

bonds are subject to a variety of risks inlcuding: credit risk- the risk that the issuer cannpt make interest and principal payments. the rating agencies rate bonds only for credit risks. risks of corp and muni bonds are DRIP d-default risk r-reinvestment risk i-interst rate risk and p-purchasing power. Government bonds is RIP- no default or credit risk use RIP for all gov bonds except zeros)

dividend options

cash option(dviiends paid to policy owner in cash generallt not taxable) reduction of premiums (insurance company subtracts amount of div from the premium due and sends notice for remainder of premium), accumulated with interest (dividneds remain with insruance company in interest bearing account the interest paid on the dividends is taxable although thr dividend itself is not taxable. dividends are added to the death proceeds or if the policy is surrenedered to the cash value. 4. purhcase paid up additions (each div is used to purchase a small amount of additional fully paid up whole life insruance the additions are added to policy face value to determine the death benefit the cash value of paid up additions whole life insurance is added to guaranteed cash value of basic poliyc to calculate the surrender value 5. one year term insurance (fifth dividned) all or a portion of thedividned is used to buy one year term insurance equal to policys base cash value

settlement options

cash option- distributions upon surrender of payment on isnureds death owner or beenficary takes lump sum 2. interest option, the proeeds are teinaed temp by insurer and only interst is paid this gives the person time to consider other settlement options or take lump sum later 3. installements for a fixed perioud ( the procees plus interest are paid out over a speicfic interval up to 30 years) 4. iinstallments of a fixed amount (the proceeds are paid out in a fixed amount 1k per month for example as long as proceeds plus interst will last 5. life inscome options (same options ars are vail under annuity settlement optins pure life or single life, period certain, joint and seruviror or refund

net cash value

cash value less the loan

loretta and sara own a company. their basis is 100k each. they are equal owners (total value 1M set by buy sell agreement) if they sign a stock redemption buy sell and loretta dies what happens

company would buy lorettas shares from her estate for the previously agreed value of 500k, lorettas basis steps up no income tax due but the buy sell proceeds are included in her estate (500k). sara would then own 100% of the company but her basis remains unchanged at 100k. sara could either leave her buy sell policy in the company or buy it from the company (she is the insured so this will not cause a transger for value problem)

mortgage bonds corporate

considered the safest among long term corp issues, mortgage bonds are backed by specific real porperty (land and buildling) owned by the issuing corp. the real property can be sold if the issuer defaults

grandfathered life insurance rules

contracts issued prior to june 1988 and death beenfit increases after 1988. if death benefit increases y more than 150k

bond conversion value

conversion value= (par value of bond/ conversion price) *current market price of underlying stock

debenture

corporate debt obligation backed only by the integrity of the borrower

joe will retire at 65 he is a particapnt in a pension plan with only annuity payout options no lump sum. joe askes for options.

either 5k per month pure life for him or joe nd wife 3375 ptr month joint and survivor. this is a pension ma strategy netails electing a single life annuity or benefits for wife

endorsement method

employer is the owenr, employee is not a shareholder. death or policy of surrener: employer retains cash value of the policy or premiums paid if greater. employees beneficary gets balance of death benefit. employer pays premium. premiums paid or cash values are refunded at death or surrender.

collateral assignement method

empoloyee is owner. employee is sharehoder. employee assigns the policy. death or policy surrender employer receives premiums paid, emplouee gets balnance of cash value or beneficary gets balance of death beenfits. employee is charged with table 2001 insruane cost or beneficary receives income tax free.

contract is a modifered endowment contract is it meets the reqirements for classfication as a life insruance contract (the 1984 act_ and was

entered into on or after june 21, 1988 and fails to meet the seven pay test

if interst rates increase

eople will continue their previously issued morrtgages then the FNMA holder is stuck with an ivnestement that pays lower than market rates. thus the value of investemnet will fall. hwoever if the investemnet rates decrease homeowners will pay off their mortgages and would reveivve the principal. the prinicpal would have to be reinvested the new investemtn would pay a lower rate of return

polly is a 78 yearold widow and owns 14M in assets. she has home, auto etc totaling 2M. she owns 12M in Cds, gov bonds, and GNMA bond fund. she asks how she can reeive more guaranteed income and redue future estate taxes

if she purchases a 500k pure life immediate fixed annuity her payout could be 60k+/year guaranteed for life approx a 13% payout not a return. the 500k is removed from her estate this provides income and could reduce or eliminate future estate taxes. the payout is partially tax free return of basis under annuity rules

exceptions to transfer for value problem

include a sale or transfer to insured or a sale to a corp in which the insured is a shareholder or officer

which will increase personal cash flow for a client

increase the auto insurance deductible , increasing the deductibles generally lowers premiums. HHs pay interest semiannually but as of sept 1 2004 EEs can no longer be converted to HHS

section 1035 exchanges

tax free exahgnes of life insurance and annuity contracts: the exchange of a life insurance policy for another life insurane policy or for an annuity contract, the exchange of an annuity contract for another annuity dcontract, tax free exchanges are now permitteed from life isnrunce and annuity to qualified long term care policies

I bonds

inflaiton indexed accrual securities of the US gov. they are NON marketable, nontrasferabel and noneogtiable and cannot be pledged for collateral. they are sold at face value. I bonds accumulate interst monehtly. interst is compounded every six months on the semiannual anniversary of the bonds issue date. they are issued in the same denominations as EE bonds but unlike EEs have NO guaranteed interst rate. the interest rate is composed of two parts a fixed base rate and inflation adjustment. the fixed rate remains the same for the ilfe of the bond. the inflation asjustment is updated every six monts to track inflation as measured by the CPI. fixed rates and inflation adjustemnets are aanounced by the treasury department on May 1 and Novemeber 1 for the following 6 month period. If certain req are met, interest on I bonds redeemed for edcuation expense is tax exempt similar to series EE bonds.

which is true about I bonds

interest is added to the bond monthly and paid when the holder cashes the bond. the inflation adjusted interst on I bonds accrues until the bond matures or is redeemed. EE Bonds provide a fixed rate of interst. I bonds interst is composed of two parts: the fixed part and inflation part

which is true about Series EE and HH bonds

interst on EE bonds are not subject to state and local taxes; Interst on HH bonds is subject to federal tax. HH bond interst is taxed yearly. both bonds are non marketable with interst that is not subject to state or local taxes. HH bonds are no longer issued or traded.

GNMA risks

interst rate risk- fixed interst rate means price falls when interest rates rise, and reinvestemnet risk, reduced certainty of the montholy payment due to homewoners repalying mrotgage prematurely when interst rates fll.

yield

investors should be aware that each payment receied represents both interst and return of prcinpal

the interset earned on series EE bonds

is NOT subejct to federal income taxation until the bonds are redeemed or reach final maturity. the owner has the option of having the interest ataxed each year. Interst is not subjet ot state or local taxes.

a single premium policy issued after 1988

is always a MEC for the CFP certifcation

identify features of a mortgage backed security

it is a security backed by mortgages, investors receive payments sourced from the interest and principal on the underlying mortgages, it is a pass through security, it represnets pooled debt obligations repackaged as certificates. as homeowners pay down principal, it is passed through to the hodlers of the mortgage backed securities. examples of mortgage backed certificates include GNMA, fannie mae and freddie mac securities

if frank had purchased a 500k policy on howies lfe with a single premium MEC policy and howie dief how would the death benefits be treated

it would be income tax free death benefits from MEC contracts are tax free

bill and jack own bj industries a corp. they are condisering adopting a corss purchase buy sell arrangement. bills wife is lynn and jacks wife is Jane. who should own and be the beneficiary of Bill's policy

jack should own the policy and should be the beneficiary. the surviving owner buys own the deceased owner. jack needs to be both the owner and beneficary to keep policy out of bills sestate and out of the corps assets. the proceeds of the buy sell arrangement are paid to bills estate by jack.

which desribes a modified endowment contract

meets req of life insurane constract, it was entered into on or after june 21, 1988, it fails to meet the seven pay test, it meets the guideline premium and corridor test or cash value accumulation test

monty purhases aGNMA fund one year ago for 25k and hae reveived all distiutions in cash. it i now worth 24k, whiy is its current value lower than purchase price

mortgage interst rates are increasing or principa is being paid off. increasing market rates will cause a decline in the NAV of the FNMA portolio(rates up, bonds down) principal is less likely to be paid off in a rising interst rate envirnoment. however as pepole move prinipal is eve tualy repaid causesing NAV to decline

1988 act eliminated

most sales of single premium life insurance contracts

muni bonds

muni securities are issued by states, cities, counties and other non federal gov units in order to raise capital

Jody is hired to design an investment portfolio for the companys new pension assets total 100k. the trustees are very conservative. how should jody position the assets

negotiable CDs. CDs have the least risk (insured up to 250k) treasury bonds and GNMAs are subject to reinvestment, interst rate and purchasing power risk RIP. FHLMCs are not guaranteed y the US gov and are subject to DRIP. they can default.

in 1979 my williamson purchased 200k universal life policy with a 150k guaranteed insurability option . he will exercise the 150k option to increase death benefit. willthe policy become an MEC

no it retains grandfather status because he is only increasing the death benefit up to the grandfathering limit of 150k and he does not have to prove insurability.

a sale of a policy to a family member other than the insured is

not a taxable gift but does cause a transfer of value

bob is a key employee of BB inc. bob is retiring and the company says they will sell the key pesron policy on bob. who can purchase the policu without triggering a trasnfer for value problem

only bob, the insured can purcahse the policy without triggering the transfer for value rules

what amount would be taxable

premiums biled - dividneds used to reduce premium = 50. cash value = 75-50= 25 . the taxable amount is the cash value less the net premiums that were aCTUALLY paid

annuities

presumption is that annuities are annuitized. an annuity is a preiodic payment from an account maintained by a life insruance ompany beginning at a specific or contingent date and continuing for a fixed period or for the duration of adesignated life or lives

dividends paid by nmutual life insurane companies under mofiided endowment contracts are taxable as income if they are used as

received in cash or to reduce premoums due, if they are retinaed by insurer in prepayment of a policy loan

if they enter a cross purchase buy sell and loretta dies, what are the tax consequences

sara would buy lorettas shares from her estate for the previously agreed upon value 500k. lorettas basis steps up with no income tax due but the buy sell proceeds would be included in her estate (500k). sara would own 100% of copmany her new basis equals the buy sell value of 500k plus 100k. she uses the insurance to buy lorettas shares. sara could buy the policy loretta owned on saras life from lorettas estate she is the insured so this will not cause a transfer for value problem

pat buys a whole life insurance policy. she pays normal level premium which is true

she can borrow money from contract without incurring income tax on the loan amount, if she borrows money from teh contract, the loan interst is personal interst and is not deductible, if she dies the death proceeds are paid income tax free to beneficiary. if on surrender, the policy has a gain above basis the gai would be taxed as ordinary income. interst on policy loans are no longer deductible.

under the endorsement form of split dollar life insurance, which is true concerning the insureds wufe presuiming that the isnured employee specifies that she is to be named his beneficary

she is a virutal secondary beneficary and she is the absolute aissignee. under endorsement form the owner and premium payor is the corp and the corp is the primary beenficary to the extent of premiums paid of cash value. thus the insured wife is functionally a secondary ebenficary. the benefits of the policy can be aboslutely assigned. absolute assignement means the insured gives up the right to change the beneficary therefore he has no incidents of ownership and the benefits from policy are removed from his estate. the 3 year rule is still applicable from time the absolute assignemtn is signed

step up in basis

stock purchase: company owns the policy. the company receives the benefits. franks basis remains unchanged. howie's estate gets a step up in basis. 2. cross purchase: frank owns policy. his interest gets a step up in basis. howie's estate enjoys a stepped up basis.

taxation of distributions under modieified endowment contract is similar to

taxation of a deferred annuity

tax treatment

the investor is taxed annully on the interst payment plus appreciation in face value on TIPS. only fedral tax applies since TIPS like conventional treasuries are exenpt from stte and local taxes. at the end of the first year the two interset payments in interst income (received in cash) plus the $65 increase inprinciapl are both taxed at investors ordinary income tax rate. further the $65 increase in face value is imputed or phantom income that is taxable now but not collectable until the bond is sol or matures. the TIPS holder may raise basis to correspond with the phantom income that must be recognized. this income is taxable in the year it is accrued. a decrease will first reduce the interst income attributable to the semi anual interst and if thereexccess the excess will be an ordinaty deduction

EE bonds issued after 2005

the non traded debt of the US gov. savings bonds are nonmarketable, nontrasnferable and nonnegotiable and cannot be pledged for collateral. they are issued at face value. Seriess EE savings bonds issued earn fixed interst rates. the fixed rate applies for the 30 year life of each bond which is twenty years but also adds a 10 year extended maturity period. denominations are as low as$50. rates for new issues wil be adjusted may 1 and nov 1, with each new rate effective for all bonds issued through the following six months. interst accrues monthly monthly and is compounded semiannually savings bonds must be held a minimum of one year. there is a three month interst penalty applied to bonds held less than 5 years from issue date. at a minimum the treasury guarantees that a bonds value will double after 20 years and it will continue to earn the fixed rate set at the time of issue unless a new rate or rate structure is announced. if a bond does not double in value in 20 years the treasury will make a one time adjustemnet at maturity to make up the difference. interst will be based on current 10 year treasury note yields.

business overhead expense insurance

these policies over the ongoing costs of operating a business while the business owner is totally disabled. aactual expenses but not the owners salary are reimbursed during the time of disability up to a max monthly benefit usually for up to 1-2 years.

which is true about TIPS

they are issued in min denominations of 1k, the interst rate is fixed, interset payments vary as the principal is adjsusted for inflation and deflation, they are obligations of the federal government

lester owns a whole life contract he MECed the contract by pating too much premium. under wht types of distributions are dividensds paid by this contract taxable

they are received in cash, they are used to reduce premium or they are used to pay off a policy loan. they AREN't taxable when they accuulate with iterst howevr the intesrt paid on dviidensds is taxable

the best way to avoid transfer for value rule is to have the insured pirchase the policy.

they are then free to make a gift to family memeber or trust. they must survuve the 3 year contemplation of death rule to keep life insurance face value out of his estate but it is income tax free. a transfer to dons wife is a transfer for value

which is true about newly issued EE bonds

they pay a fixed rate of interst for up to 30 years and they are no longer exchangeable into HH bonds

transfer for valuerule

this rule provides that if a policy is transferred from one owner to another for valuable consideration the icnome tax exclusion is lost example: viatical settlement.

which applies to US treasury bonds

treasury bonds have purchasing power risk due to their long maturities they are exposed to RIP- reinvestment risk, interset rate risk and purchasing power risk. long maturity instruments carry signifcation inflation risk

types of annuities

types: immediate, fixed, variable and indexed. periods: accumulation and annuitization payout methods: life, period certain, joint with survivor

problem with MECS

withdrawals and loans are LIFO plus 59.5 penalty the death ebenfits are still tax free