Annuities & IRA's

Ace your homework & exams now with Quizwiz!

Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). Assume that Juanita receives 12 monthly payments of $500 the first year. How much taxable income must she report?

$3,000

Donna is single and earns $30,000 annually. She is covered under her employer's retirement plan. Donna would like to start a traditional IRA and contribute $3,000 this year. Which of the following describes her ability to establish a traditional IRA and the tax treatment of her contribution?

Her contribution is fully tax deductible.

Which of the following statements is (are) true with respect to annuities?I. Annuities are the opposite of life insurance.II. The fundamental purpose of annuities is to replace lost income in case of premature death.

I only

Which of the following statements is (are) true with regard to Roth IRAs?I. The portion of a Roth IRA distribution that is attributable to investment income is taxable.II. There is a maximum income level above which Roth IRA contributions are not allowed.

II only

All of the following are permissible IRA investments EXCEPT

Life Insuracne

Rita is 66 years old. She earned $20,000 this year working part-time at a store and her modified adjusted gross income was $28,000. Rita is considering making a $3,000 contribution to her traditional IRA. Which of the following statements is true regarding this contribution?

Rita can make a $3,000 contribution to her traditional IRA, and it is fully tax deductible.

Which of the following statements is true concerning traditional and Roth IRAs?

There are minimum distribution requirements for traditional IRAs.

Which of the following statements about the withdrawal of funds from a traditional IRA is true?

Withdrawals must begin no later than April 1 of the year following the calendar year in which an individual attains age 70.5

All of the following statements about variable annuities are true EXCEPT

a minimum rate of return is guaranteed.

Which of the following statements is (are) true with regard to IRAs?I. Contribution limits are higher for workers aged 50 and older.II. A spouse who does not work outside of the home may make a fully deductible contribution to a traditional IRA even if his or her spouse is covered by a retirement plan at work.

both

Stan paid an insurance company $50,000 for an annuity when he was 50 years old. At age 62,Stan plans to begin to receive payments from the insurer. Based on the description provided, this annuity can be described as a(n) variable annuity. deferred annuity. immediate annuity. life annuity with guaranteed payments.

deferred annuity.

When selling life annuities, what risk is the insurer pooling? bad investment performance bad expense experience premature death excessive longevity

excessive longevity

Brad funded a life annuity through installment payments. At age 60, he decided to elect an annuity settlement option and to begin to receive payments. Which of the following life income options will provide Brad with the highest monthly income?

life annuity (no refund)

Cassie, age 62, paid a life insurer $100,000 in exchange for a life annuity. If Cassie dies before receiving 120 monthly payments from the insurer, the remaining payments will be made to a beneficiary. If Cassie dies after receiving 120 payments, no additional payments are made by the insurer. Cassie has purchased a

life annuity with guaranteed payments.


Related study sets

U.S. history, explorers, Olmecs, Aztecs, and Mayans

View Set

Chapter 23: Asepsis and Infection Control

View Set

APUSH Unit VI: Potential Questions

View Set

Plant vs Animal cell Cytokinesis

View Set

Linux+ LX0-101 Chapter 3: Configuring Hardware

View Set