Group Life, Qualified Plans, Business Uses and Taxation

Business uses of life insurance which does NOT designate the employer as beneficiary is which of the following?

Group life

Dividends are never?

Guaranteed

Key person life insurance permits all of the following Except?

Beneficiary is elected by the key employee

In which of the following plans is the owner immediately vested?

IRA

Individually owned non-qualified annuities are generally taxed as follows:

Premiums are not deductible; interest credited to the cash value is taxed deferred.

Personal life insurance premiums and death benefit proceeds are generally taxed as follows:

Premiums are not tax deductible, death benefits are income tax free.

If you contribute more than the maximum amount to a Roth IRA. What will most likely happen?

You will pay a tax penalty.

Which of the following is an example of an agent's fiduciary responsibilities?

An Agent promptly forwarding premiums to the insurance company

Which of the following is NOT true of Section 1035 Policy Exchanges?

Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.

All of the following are true of the federal tax advantages of a qualified plan EXCEPT:

At distribution, all amounts received by the employee are free of taxes.

Which of the following is true regarding the taxation of accelerated benefits?

Benefits are not taxed

A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as which of the following?

Buy & Sell Agreement

Which of the following Qualified Plans relies upon a formula for determining the retirement payout?

Defined Benefit

Which of the following scenarios will incur a 10% tax penalty on distributions?

Distributions are made on a policy before age 59½.

Which of the following is true of a qualified plan?

It has a tax benefit for both employer and employee.

Roth IRA's permit all of the following EXCEPT?

Minimum required distributions by the age of 70 1/2

A premature distribution from an individually owned non-qualified annuity is:

Subject to a 10% penalty

The annual increase of cash value within a life policy generally is:

Tax deferred as long as the policy is not terminated

All of the following are true about Non-Contributory Group Insurance EXCEPT:

The amount of coverage is selected by the participant. Employer selects coverage.

An insured purchases a $1,000,000 life insurance policy paid up at age 65. At age 65 the cash value of the policy is $180,000. In the past the insured borrowed $35,000 from the cash value. When the insured dies, what amount is taxable in the insured's estate?

$1,000,000

A 457 Plan permits a deferral of compensation of up to 33 1/3% of wages or up to maximum of which amount?

$16,500....that amount typically changes on a year basis with tax code revisions (just an extra lol)

Which of the following statements is true regarding dividends that are accumulating at interest on a participating life policy?

The dividends are received tax free; however, the interest earned on the dividends is taxed as ordinary income.

Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?

The employer is the owner and the beneficiary. They cover their own interest in an important (key) employee.

Joe has contributed $80,000 into a Tax Sheltered Annuity. At the time he surrendered the contract, the account value was $180,000 and his tax bracket was 30%. The resultant tax amounts to?

$54,000

A Profit-Sharing Plan and Money Purchase Plan are:

Types of Defined Contribution Plans