Chapter 3: Taxes, retirement, etc.
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
settlement option
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his
Attained age
All of the following statements concerning the use of life insurance as an executive bonus are correct EXCEPT
the policy is owned by the company
What percentage of a company's employees must take part in a noncontributory group plan?
100%
All of the follwoing are true of the federal tax advatages of a qualified plan Except
At distrubution, all amounts recieved by the employee are tax free
An insured has a modified Endowment contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?
He will have to pay a penalty if he is younger than 59 1/2
Traditional IRA contributions are tax deductible based on which of the following?
Owner's income
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?
Profit sharing plan
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
Require evidence of insurability
A 403(b) plan, commonly referred to as a TSA, is available to be used by
Teachers and not for profit organization
A 60 year old participant in a 401k plan takes a distribution and rols it over to an IRA within 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of a 20% witholding tax
All of the follwing benefits are available under social security except
Welfare benefits
Which of the following is not true regarding a nonqualified retirement plan?
it needs IRS approval
In a single employer group plan, what is the name of the policy issued to the employer?
master contract
Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?
premiums are not tax deductible as a business expense