Life Insurance Chapter 6

Participant's debt.

All of the following types of distributions are considered exceptions to the early distribution rule and, therefore, are not subject to the penalty tax EXCEPT

Taxation on accumulation

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Profit sharing plan

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

The CEO of a private corporation.

All of the following employees may use a 403(b) plan for their retirement EXCEPT

It has a tax benefit for both employer and employee.

Which of the following is TRUE of a qualified plan?

A qualified plan for a small business

If a company has a Simplified Employee Pension plan, what type of plan is it?

Teachers and not-for-profit organizations.

A 403(b) plan, commonly referred to as a TSA, is available to be used by

Certain groups of employees only

A tax-sheltered annuity is a special tax-favored retirement plan available to

It needs IRS approval.

Which of the following is NOT true regarding a nonqualified retirement plan?

Tax-deductible contributions.

The advantage of qualified plans to employers is

Retirement

What is the primary purpose of a 401(k) plan?

The earnings in the plan accumulate tax deferred.

Which of the following describes the tax advantage of a qualified retirement plan?

403(b) Plan (TSA).

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

Employees.

For a retirement plan to be qualified, it must be designed for the benefit of

No penalties

A 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay?