Pre-Licensing Insurance Course Chapter 11

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

A fully insured individual must have which of the following? a. 40 quarters of credit b. 20 quarters of credit c. 10 quarters of credit d. 4 quarters of credit

a. 40 quarters of credit

How long is the waiting period for disability benefits under Social Security? a. 5 months b. 6 months c. 12 months d. 29 months

a. 5 months

How many quarters of coverage are required for currently insured status under Social Security? a. 6 b. 10 c. 20 d. 40

a. 6

How many quarters of credit must an individual have to be currently insured under Social Security? a. 6 b. 10 c. 20 d. 40

a. 6

All of the following are false regarding taxes imposed on traditional IRAs, EXCEPT: a. Contributions are made with pre-tax dollars and interest earned is tax-deferred. b. Contributions are made with taxed dollars, and interest is taxable in the year it is earned. c. Contributions are made with taxed dollars and interest earned is tax-deferred. d. All of the above are false.

a. Contributions are made with pre-tax dollars and interest earned is tax-deferred.

All of the following are false regarding the taxation of traditional IRAs, EXCEPT: a. Distributions that are made before age 59 are subject to the IRS 10% early withdrawal penalty. b. Contributions to a traditional IRA is not tax-deductible. c. Interest earned on the principal is taxable in the year it is earned. d. Withdrawals after age 59 1/2 are not taxed.

a. Distributions that are made before age 59 are subject to the IRS 10% early withdrawal penalty.

Under which insured Social Security insured status are most benefits paid? a. Fully insured b. Currently insured c. Disability insured d. None of the above

a. Fully insured

How are Social Security benefits determined? a. How long a covered worker has worked throughout their life b. How many dependents a covered worker has c. What type of retirement plan a person has d. How many years a person has been covered by Medicaid

a. How long a covered worker has worked throughout their life

Which of the following statements is false regarding taxation of non-living entity owned nonqualified annuities? a. Interest earned on the principal is tax-deferred. b. Interest earned is taxed in the year it is earned. c. Only human annuitants can receive tax-deferred interest on annuities. d. A corporation that owns a nonqualified annuity will be required to pay tax on interest on a current-basis.

a. Interest earned on the principal is tax-deferred.

Kenny is self employed. He owns a book bindery. Which statement accurately describes his Social Security tax obligation? a. Kenny must pay the employer and employee's tax portions. b. Kenny will only pay the employee's tax portion. c. Kenny will only pay the employer's tax portion. d. Kenny will not pay any Social Security tax because he is self-employed.

a. Kenny must pay the employer and employee's tax portions.

Which of the following correctly describes Social Security Survivors benefits payable if a covered worker is currently or fully insured upon death? a. Lump-sum death benefit paid to the widow and eligible children of the deceased covered worker. b. Monthly payments to the disabled covered worker in the amount of the worker's PIA. c. Monthly payments to the retired covered worker. d. Monthly payments to the spouse regardless of age.

a. Lump-sum death benefit paid to the widow and eligible children of the deceased covered worker.

All of the following are false regarding the taxation of nonqualified annuities, EXCEPT: a. Premiums are made with taxed dollars; however, interest is tax-deferred. b. Premiums are made with pre-tax dollars; however, interest is taxed in the year earned. c. Premiums are taxable and interest is taxable in the year it is earned. d. Premiums are paid with pre-tax dollars and interest is tax-deferred.

a. Premiums are made with taxed dollars; however, interest is tax-deferred.

Which federal law allows a person exchanging one life insurance policy for another to defer tax on the gains? a. Section 1035 exchange b. Tax-sheltered annuity c. Section 457 deferred compensation d. Roth IRA

a. Section 1035 exchange

Qualified distributions from a Roth IRA are: a. Tax-free b. Taxable c. Tax-deferred d. Taxable as ordinary income

a. Tax-free

Jerry is required to make a $5,000 distribution from his traditional IRA. If he only makes a $3,000 distribution, how much will he be penalized? a. $500 b. $1,000 c. $2,000 d. $5,000

b. $1,000

Joe becomes totally disabled. How much will Social Security pay Joe's wife, who relies on child support payments from Joe, to care for their 12-year twins? a. 1/4 Joe's PIA b. 1/2 Joe's PIA c. 3/4 Joe's PIA d. Joe's PIA

b. 1/2 Joe's PIA

How much will an unmarried child, Joe, age 19, in his last year of high school, receive from Social Security if his mother becomes totally and permanently disabled? a. 1/4 his mother's PIA b. 1/2 his mother's PIA c. 3/4 his mother's PIA d. His mother's PIA

b. 1/2 his mother's PIA

What is the earliest age that distributions from a nonqualified individual annuity may be made without incurring the 10% IRS early withdrawal penalty? a. 55 b. 59 1/2 c. 62 d. 65

b. 59 1/2

After a surviving spouse is in their blackout period, the earliest age they can begin to receive survivors benefits is: a. 59 1/2 b. 60 c. 62 d. 65

b. 60

How much will a covered worker receive from Social Security retirement benefits if the worker was born in 1960 and retires at age 62? a. Full PIA b. 80% of their PIA c. 50% of their PIA d. 0% of their PIA

b. 80% of their PIA

Which of the following is true regarding the taxation of traditional IRAs? a. Contributions are made with after-tax dollars and interest earned is tax-deferred. b. Contributions are made with pre-tax dollars and interest earned is tax-deferred. c. Contributions are made with after-tax dollars, but interest is taxable in the year it is earned. d. Contributions are made with pre-tax dollars, but interest is taxable in the year it is earned.

b. Contributions are made with pre-tax dollars and interest earned is tax-deferred.

All of the following are false regarding the tax consequences of Roth IRAs, EXCEPT: a. Contributions are tax-deductible. b. Contributions are made with taxed dollars; however, interest grows tax-free. c. Once the plan participant reaches age 59 1/2, taxes on distributions may still be imposed. d. Contributions and interest are tax-free.

b. Contributions are made with taxed dollars; however, interest grows tax-free.

All of the following are false regarding federal taxation of qualified plans, EXCEPT: a. Interest is taxable in the year earned. b. Contributions made by both the employer and the employee are tax-deductible; interest is tax-deferred. c. Interest is tax-deferred; employer and employee contributions are not tax-deductible. d. Employer contributions are tax-free and employee contributions are made with taxed dollars.

b. Contributions made by both the employer and the employee are tax-deductible; interest is tax-deferred.

Which of the following is false regarding taxation of distributions from qualified plans? a. Benefits are taxable as income upon withdrawal from the account. b. Distributions prior to 62 are subject to an additional 10% IRS penalty. c. Plan loans and rollovers are considered withdrawals, but are not subject to the 10% IRS penalty. d. If the plan participant becomes disabled, he or she may make early withdrawals that are subject to tax, but not the 10% IRS penalty.

b. Distributions prior to 62 are subject to an additional 10% IRS penalty.

The ________ is used to determine what portion of the annuity payment is taxable. a. Annuity death benefit b. Exclusion ratio c. Estate tax d. Seven-pay test

b. Exclusion ratio

A covered worker must be ______ insured to receive Social Security retirement benefits. a. Currently b. Fully c. Disability d. Disability and currently

b. Fully

Bob's IRA funds were invested in an annuity. Which of the following is not true about taxation of his benefits? a. If he dies, benefits are included in his estate if no beneficiary was named. b. If a beneficiary was named, interest must be paid to the beneficiary in monthly payments. c. If the beneficiary is his spouse, she may opt to receive annual payments by the year following his death. d. Distributions are subject to tax upon withdrawal.

b. If a beneficiary was named, interest must be paid to the beneficiary in monthly payments.

What is the earliest month a covered worker may begin to receive Social Security disability benefits? a. In month 5 of their disability b. In month 6 of their disability c. In month 12 of their disability d. In month 18 of their disability

b. In month 6 of their disability

The amount of Social Security retirement benefits are based on an individual's: a. Age b. Primary insurance amount c. Quarters of credit d. Dependency

b. Primary insurance amount

What is the basis for established Social Security insured status? a. Number of dependents b. Quarters of credit c. Quarters of work d. Existing insurance coverage

b. Quarters of credit

How long must an individual's disability be expected to last in order to qualify for Social Security disability benefits? a. 5 months b. 6 months c. 12 months d. 29 months

c. 12 months

How much withholding tax is assessed when funds from one qualified plan are not deposited into another qualified plan within 60 days? a. 1% b. 10% c. 20% d. 30%

c. 20%

What is the earliest a person can retire and begin to receive Social Security retirement benefits? a. 59 1/2 b. 61 c. 62 d. 65

c. 62

What is the earliest age at which an individual can begin to receive Social Security retirement benefits? a. 59 1/2 b. 60 c. 62 d. 65

c. 62

What is the full Social Security retirement age for a person born after 1960? a. 62 b. 65 c. 67 d. 70

c. 67

Which of the following correctly describes taxation of Roth IRAs? a. Contributions are made with after-tax dollars and distributions are taxable as ordinary income. b. Contributions are made with pre-tax dollars, and benefits are received tax-free. c. Contributions are not tax-deductible, but benefits are received tax-free. d. Contributions are made with pre-tax dollars, but benefits are taxable as ordinary income.

c. Contributions are not tax-deductible, but benefits are received tax-free.

The exclusion ratio identifies and segregates the annuity payments between principal ( ______ ) and interest ( _______ ). a. Tax base; principal base b. Cost base; principal base c. Cost base; tax base d. Tax base; expense base

c. Cost base; tax base

All of the following statements are true regarding taxation of qualified plans, EXCEPT: a. Qualified plans are special federally-regulated employer-sponsored retirement accounts with tax advantages. b. Employer contributions to a qualified plan are tax-deductible. c. Employee contributions to a qualified plan are not tax-deductible. d. Interest earnings are tax-deferred until withdrawal.

c. Employee contributions to a qualified plan are not tax-deductible.

Which of the following is true regarding federal taxes on qualified plans? a. Employer contributions are tax-deductible and employee contributions are made with after-tax dollars. b. Interest earnings are taxable in the year they are earned. c. Employer and employee contributions are tax-deductible, and interest earnings are tax-deferred. d. Employer and employee contributions are not tax-deductible, but interest is tax-deferred.

c. Employer and employee contributions are tax-deductible, and interest earnings are tax-deferred.

Which of the following terms describes the portion of the periodic annuity benefit that is taxed? a. Estate tax b. Seven-pay test c. Exclusion ratio d. None of the above

c. Exclusion ratio

Maria is self-employed. She owns her own ballet studio. Which of the following is true regarding her portion of Social Security tax? a. Maria will only have to pay the employee's portion of the tax. b. Maria will only have to pay the employer's portion of the tax. c. Maria will have to pay the employer and the employee's tax portions. d. Maria will not have to pay the tax because she is self-employed.

c. Maria will have to pay the employer and the employee's tax portions.

Social Security is also referred to as: a. Medicare b. Medicaid c. OASDI d. Disability income insurance

c. OASDI

Which of the following is true regarding taxes on nonqualified annuities? a. Premiums are paid with pre-tax dollars and interest is tax-deferred. b. Premiums are not tax-deductible and interest is taxable in the year it is earned. c. Premiums are not tax-deductible, but interest is tax-deferred. d. Premiums are paid with pre-tax dollars, but interest is taxable in the year it is earned.

c. Premiums are not tax-deductible, but interest is tax-deferred.

What is the basis for Social Security retirement benefits? a. Status of dependency b. Age c. Primary insurance amount (PIA) d. Quarters of credit

c. Primary insurance amount (PIA)

What is the basis for a person's Social Security insured status? a. Primary insurance amount b. Age c. Quarters of credit d. None of the above

c. Quarters of credit

OASDI is also referred to as: a. Medicaid b. Medicare c. Social Security d. Disability income insurance

c. Social Security

All of the following statements are true regarding the IRS early withdrawal penalty for nonqualified annuities, EXCEPT: a. The penalty applies to withdrawals made prior to age 59 1/2. b. If an early withdrawal is made, the penalty applies in addition to ordinary taxes on the taxable portion of the withdrawal. c. The IRS early withdrawal penalty is 20%. d. Early withdrawals are subject to the IRS early withdrawal penalty.

c. The IRS early withdrawal penalty is 20%.

Which of the following is false regarding eligibility for Social Security disability benefits? a. The covered worker must be unable to do the work they did prior to the disability. b. The covered worker must not be able to do other work. c. The disability must have lasted or will last for at least 6 full months or be expected to end in death. d. All of the above

c. The disability must have lasted or will last for at least 6 full months or be expected to end in death.

Which of the following factors does not affect how much a retiree will receive for Social Security monthly retirement income benefits? a. The retiree's age b. The retiree's insured status, fully or currently insured c. The retiree's sex d. The retiree's PIA

c. The retiree's sex

Walt is totally disabled and has applied for Social Security disability benefits. How long must Walt wait to be eligible to receive full Medicare benefits? a. 6 months b. 12 months c. 24 months d. 29 months

d. 29 months

A Social Security currently insured individual has: a. 1 quarter of credit b. 2 quarters of credit c. 4 quarters of credit d. 6 quarters of credit

d. 6 quarters of credit

Bobette works as a clerk at SAV-MORE convenience store. What is the percent of Social Security payroll tax deducted from her paycheck? a. 2.90% b. 3.20% c. 4.20% d. 6.20%

d. 6.20%

What is the maximum number of days a person has to rollover IRA funds to prevent the 20% tax penalty for withholding funds? a. 5 days b. 20 days c. 30 days d. 60 days

d. 60 days

Within how many days must Samantha roll over the funds from her IRA to avoid the 20% withholding tax penalty? a. 10 days b. 31 days c. 45 days d. 60 days

d. 60 days

Social Security disability benefits are payable to a covered disabled worker until the age of: a. 50 b. 60 c. 62 d. 65

d. 65

At what age must distributions from a traditional IRA begin to prevent adverse taxation? a. 40 b. 59 1/2 c. 65 d. 70 1/2

d. 70 1/2

Distribution of funds from a traditional IRA must begin by the age of _______ to avoid the tax penalty. a. 59 1/2 b. 62 c. 65 d. 70 1/2

d. 70 1/2

All of the following individuals would not be covered by Social Security, EXCEPT: a. A nun b. Railroad worker covered by the Railroad Retirement Act c. Police officer covered by a retirement program d. A nurse practitioner who owns their own practice

d. A nurse practitioner who owns their own practice

In order to obtain fully insured status, a covered worker must accrue one quarter of coverage each calendar year after the age of 21 for a total of 40 quarters and minimum of six quarters, upon the earliest of: a. The year prior to reaching age 62 b. The year of disability onset c. The year prior to death d. All of the above

d. All of the above

Which of the following correctly describes Social Security survivors benefits for a covered worker who is fully insured? a. Monthly payments to the widow equal to the deceased spouse's PIA if the widow is age 65 or above b. Lump-sum death benefit paid to the widow and eligible children of the deceased covered worker c. Monthly payments to a dependent parent age 62 and above d. All of the above

d. All of the above

Which of the following employees would not be covered by Social Security? a. A person hired by the Federal government in 1980 b. A priest c. A self-employed, homeless street musician d. All of the above

d. All of the above

How long is the reduction in Social Security retirement benefits effective for a person who retires early? a. 2 years b. 5 years c. Until age 70 d. All throughout retirement

d. All throughout retirement

What is a section 1035 exchange? a. A modified endowment contract b. Transfer for value c. Seven-pay test d. Contract exchange without tax consequences

d. Contract exchange without tax consequences

Which of the following is true regarding the taxation of Roth IRAs? a. All distributions are taxable until the plan participant reaches the age of 59 1/2. b. Contributions are tax-deductible. c. Contributions are tax-deductible and interest is earned tax-free. d. Contributions are not tax-deductible, but interest grows tax-free.

d. Contributions are not tax-deductible, but interest grows tax-free.

Social Security quarters of coverage earned are based on ________ quarters worked, and ________ be earned consecutively. a. Consecutive; must b. Consecutive; can c. Cumulative; cannot d. Cumulative; do not need to

d. Cumulative; do not need to

A nonqualified annuity: a. Is a type of qualified plan b. Has tax-deductible premiums c. Is not subject to tax d. Has tax-deferred growth on the cost base

d. Has tax-deferred growth on the cost base

Luka is eligible to receive both spousal and retirement benefits. Which of the following is true? a. Luka will receive the spousal benefit only. b. Luka will receive the retirement benefit only. c. Luka will receive both the spousal and the retirement benefits. d. Luka will receive the larger of the two benefits.

d. Luka will receive the larger of the two benefits.

Social Security retirement benefits include all of the following, EXCEPT: a. Monthly payments to a covered worker b. Monthly payments to a covered worker's spouse, age 65 or older, in an amount of 1/2 the covered worker's PIA c. Monthly payments to a divorced spouse over age 62 d. Monthly payments to a grandchild of the covered worker in the amount of the covered worker's PIA

d. Monthly payments to a grandchild of the covered worker in the amount of the covered worker's PIA

All of the following statements are true regarding the taxation of nonqualified annuities, EXCEPT: a. Annuities are taxed based on the exclusion ratio. b. The exclusion ratio determines what portion of annuity payments are a return of principal, and thus not taxable, and what portion are interest earned on the principal, which is taxable. c. Premium payments into an annuity become the cost base. d. Premiums are made with pre-tax dollars.

d. Premiums are made with pre-tax dollars.

An individual's Social Security insured status is based on their: a. Age b. Dual benefit eligibility c. Primary insurance amount d. Quarters of credit

d. Quarters of credit

A person who is eligible to receive both spousal and retirement benefits from Social Security will: a. Only receive the spousal benefit b. Only receive the retirement benefit c. Receive both the spousal and retirement benefit d. Receive the benefit that is larger

d. Receive the benefit that is larger

All of the following statements are true regarding Social Security disability benefits, EXCEPT: a. Social Security disability benefits are only payable prior to the age of 65. b. Social Security disability benefits are only available to covered workers who are fully insured and disability insured. c. Social Security disability benefits are payable after a 5-month waiting period. d. Social Security disability benefits cover partial and short-term disabilities.

d. Social Security disability benefits cover partial and short-term disabilities.

All of the following benefits are provided by Social Security, EXCEPT: a. Disability b. Retirement c. Survivors d. Supplemental medical insurance

d. Supplemental medical insurance

How much is the Social Security disability benefit payable to a covered worker? a. 1/4 their PIA b. 1/2 their PIA c. 3/4 their PIA d. Their PIA

d. Their PIA

After the 5-month waiting period, Social Security disability benefits are payable to the disabled covered worker in the amount of: a. 1/4 their PIA b. 1/2 their PIA c. 3/4 their PIA d. Their total PIA

d. Their total PIA


Kaugnay na mga set ng pag-aaral

Chapter 8: The media - government

View Set

Pharm Chapter 11 - Antifungal Agents

View Set

Intro To Programming With Python

View Set

ch 14: Agricultural Methods and Pest Management

View Set