Federal Tax consideration for life insurance and annuities
Which of the following is true regarding taxation of policy dividends
Dividends are not taxable
In a direct rollover, how is the money transferred from one plan to the new one?
From the trustee to the new trustee
When a beneficiary in a life insurance policy receives payments consisting of both principal and interest portions, what will eb taxed as income.
Interest only
Which of the following is NOT true regarding policy loans
Money borrowed from the cash value is taxable
Generally, the premium paid for personal life insurance is
Not tax deductible
In life insurance policies, cash value increases are.
Tax deferred
For personal life insurance, the lump-sum death benefit is received
Tax free
Which of the following taxation principles applies to annuities
Tax-deferred accumulatio
Which method us used to determine the taxable portion of each annuity payment?
The exclusion ratio
The 10% early withdrawal penalty from an IRA can be waived for
Catastrophic medical expenses
Avoiding tax consequences when transferring assets from one IRA to another can be accomplished by which of the following
Direct rollover from one plan to the other
Which of the following terms is used to name the nontaxable return of unused premiums?
Dividend
If $100,000 of life insurance proceeds were used in a settlement option which paid $13,000 per year for 10 years, which of the following amounts would be taxable annually
$3,000
A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of the policy to an annuity. The nontaxable transaction is call a
1035 exchange
Excess contributions to a Roth IRA are subject to what tax penalty?
6%