Pre-Licensing Training: Taxation - Section 9

Laura has paid a total of $3,600 into her annuity. The cash value in her account is currently $4,200. If Laura rolls the entire value of her annuity into a different annuity under a section 1035 exchange, she must pay income tax on:

$0

How much is the one time death benefit from Social Security?

$255

Which of the following is not a major type of Social Security disability coverage?

- Disabled Adult Benefits.

In a seven-year vesting schedule, what percentage of employer contributions is vested after seven years?

100%

This provision allows you to exchange an existing insurance or annuity contract for a newer contract without having to pay taxes on the accumulation in your old contract

1035 exchange

Within how many days must an employer give a terminated employee notice to convert his life policy?

15

Upon the death of a primary breadwinner who is fully insured under Social Security, a dependent child is eligible to receive an income benefit until the age of

18 or 19, if unmarried and a student in elementary or secondary school

The number of credits required for fully insured status is:

40

Which of the following statements about 401K plans is incorrect?

401(k)s are known as a cash or deferred account or CODA

What qualified retirement plan is a defined contribution plan with pretax contributions that uses annuities and mutual funds only for investment options?

403B

A widow can begin to receive full Social Security retirement benefits at age

65

Each of the following would be able to deduct the premiums from a life policy from taxes except:

A company paying premiums for employees as a bonus or incentive

Vesting is best described as:

An employee's right to ownership of the funds contributed by the employer.

Which of the following are not regulatory requirements for dependents under group life plans?

A dependent may be covered up to age 18 under normal circumstances.

All of the following should be eligible to establish a Keogh retirement plan, except:

A family owned corporation for the benefit of their employees

Which of the following statements is correct?

Annuities do not pass ta exempt however life insurance does

Defined contribution plan is a qualified retirement plan in which

contributions are defined but the ultimate benefit to be paid is not.

When would life insurance proceeds be subject to federal or state income taxes?

When the policy is transferred for money.

Which of the following statement about profit sharing plans is incorrect?

Yearly earnings are fully taxable in the year received

Which of the following statements regarding annuity taxation is false?

a withdrawal from a deferred annuity under the contract's free withdrawal provision exempts the distribution from the pre-59 penalty tax.

Annuity benefits or a combination of principal and interest. What is the taxation status of the principal?

Both are correct statements - if the annuity was purchased with after tax dollars and the interest is taxable and the principal is not and if the annuity was purchased with pre-tax dollars then both the interest in principal are taxable

Which statement concerning a Roth IRA is not correct?

Contributions are not deductible

All the following statements about group life insurance policies are false except:

Each employer is the master policyholder

Which of the following is not a requirement for eligibility in an employer plan?

Employees must be 18 years of age or older

All monthly retirement benefits can be paid to the following family members except:

Married children underage 19 if still in school

All of the following would qualify for a Keogh plan except:

Owners of an incorporated business.

In a group policy the employer is responsible for all of the following except:

Paying the premium and notifying the insurer of employees who are higher risk than others

Which of the following is not a major difference between social and private insurance?

Private insurance benefits are mandated by law

All of the following are valid reasons that could support the recommendation to purchase a deferred annuity except

Stuffed up basis the beneficiary at the owner's death

The incorrect statement pertaining to TSAs would be

TSAs are available to employees of certain nonprofit organizations in schools, such as a nursing student.

The period of time following the youngest child's 16th birthday until the surviving parent is eligible is called:

The black out period

The following are IRS requirements for qualified retirement plans except:

The plan must have investing requirement just for the officers and stockholders

Which of the following would generate a taxable situation?

The policyowner surrenders the policy and receives $15,000 in cash value in which they paid $12,000 in premiums.

Which of the following statements concerning currently insured is incorrect?

The spouse with no minor children will be entitled to the widow/widower (spousal income) at 60

Of the following correct statements concerning the conversion privilege of group term life insurance which is not correct?

There is no coverage during the conversion. If the employee/insured has decided to not exercise their rights to convert

Which of the following is incorrect concerning quarters?

To be fully insured you must earn at least 1 credit being at age 21 for each year, so at 24 you would only need 4 credits to be fully insured.

All of the following characteristics of group life policies are correct except:

Underwriting is based on the groups age and average health condition