(Life) Retirement and other concepts
(self employed plans) to be covered under Keogh, person must be self-employed or partner working part or full time who owns _% of business
10
employee usually has _ days after terminating from group to use conversion
31
LIFE SETTLEMENT, owner sells existing life policy to
3rd party
situations where contract owned by someone other than insured
3rd party
(social security) fully insured refers to someone whos earned _ quarters of coverage
40
(Roth IRA) grow tax free as long as account open for at least _ yrs
5
if master contract terminated, every person on plan for _ yrs can convert
5
(IRA) age _ or older can make catch up contributions
50
(IRA) withdraws prior to age _ considered early, subject to 10% tax
59.5
(Roth IRA) excess contributions subject to _% tax penalty
6
(social security) person can get currently insured status and qualify for benefits if they've earned _ credits thru 13 quarters
6
(social security) retirement benefits begin when worker earned req credits AND reaches age
65
all are reqs for social security benefits except being
65
disability benefits available for fully insured worker who is totally and permanently disabled prior to age
65
to determine if policy overfunded IRS established
7 pay test
(IRA) starting at age _, owner must receive at least a minimum annual amount, known as REQUIRED MINIMUM DISTRIBUTION (RMD)
72
(Roth IRA) distributions do NOT have to begin at age
72
(social security) if individual entitled to Medicare part a, automatically get part
B
principle under which its assumed that funds paid into policy FIRST will be paid out FIRST
FIFO
(retirement plans) employee sponsored QUALIFIED PLAN is approved by
IRS
policy loans borrowed from cash value is or isnt taxable
IS
money borrowed against cash value is or isnt income taxable
ISNT
(self employed plans) HR10 or _ plans make it possible for self employed people to be covered under IRS plan
Keogh
(self employed plans) anyone at least 21, worked for self employed person 1+ yrs, worked at least 1000 hrs MUST be included in _ plan
Keogh
(self employed plans) contribution limits are _ of established dollar limit or 100% of earned income
LESSER
principle applied to asset management in life insurance products, under which its assumed funds paid into policy LAST paid out FIRST
LIFO
failing the 7 pay test means classified as an _
MEC
accelerated benefits are taxable or no
NO
policy loans taxable or not to business
NO, NOT TAXABLE
how are contributions to tax sheltered annuity treated with regards to taxation?
NOT included as income for employee, taxable upon distribution
true concerning taxation of premiums in key person life insurance policy?
NOT taxable as business expense
social security also called
OASDI
(social security) amount of benefits worker will receive under social security is called
PIA primary insurance amount
(social security) type and amount of benefits determined by amount of credits or _ worker earned
QCs
_ plan is suited for small employer or self employed
SEP
_ plan is for small businesses w/ <100 employees who get less than $5000 in compensation
SIMPLE
once MEC, always MEC, true or false
TRUE
life settlement would require an _ assignment
absolute
participant in 401k rolls over distribution within 60 days, which is true
amount of distribution reduced by amount of 20% withholding tax
group life is _ renewable term insurance
annually
corporation is owner and benefit of key person policy. if corporation collects benefit, then
benefit is tax free
any activity relating to solicitation and sale of life settlement contract to 3rd party with no insurable interest in insured
business of life settlement
agreement that determines what will be done with a business in the event an owner dies or becomes disabled
buy-sell (business continuation)
what does liquidity refer to in life insurance?
cash values can be borrowed
tax sheltered annuity is special plan available to
certain employee groups
when premiums for group shared between employer and employees, plan is called
contributory
true regarding group life?
cost of coverage based on ratio of men and women in group
used in partnerships when each partner buys policy on other
cross purchase
(executive bonus) since employer treated premium as bonus, tax _ for employer, NOT for employee
deductible
premiums NOT tax
deductible
premiums that employer pays for life insurance on employee are tax _ to employer as business expense
deductible
(simple plan) taxation is
deferred
cash values grow tax
deferred
what part of surrender income would be income taxable?
difference between premium paid and cash value
taxes must be paid upon contribution or _, NOT BOTH
distribution
(retirement plans) IRA and Roth IRA lets individuals with an _ income contribute
earned
for retirement plan to be qualified, must be designed to benefit
employees
all are true regarding tax qualified annuities except
employer contributions not tax deductible
used when partnership buys policies on partners
entity purchase
purchase of life insurance creates immediate
estate
arrangement where employer offers to give employee wage increase in amount of premium on new life insurance policy on employee
executive bonus
policy death benefits paid under business owned or employer provided life policy are received income tax _ by beneficiary
free
(retirement plans) nonqualified plans require no _ approval and let employer discriminate for valuable employee
gov't
(life settlement) with terminal illness/short life expectancy, owner can sell policy to settlement provider for _ amount than what would be received if surrendered for cash value
greater
issued to sponsoring organization, covers multiple members of group
group life insurance
cash value of business owned life insurance policy accumulates on tax-deferred basis and taxed same as _ policy
individual
if employee terminates membership in insured group, employee has right to convert to individual policy WITHOUT proving _
insurability
risk of premature death of key employee can be lessened with
key person insurance
any financial transaction where owner of life policy sells policy to 3rd party for some form of compensation, usually cash
life settlement
person who, for compensation offers to negotiate life settlement contract
life settlement broker
establishes terms under which life settlement provider will pay compensation to policyowner
life settlement contract
person other than owner who enters into life settlement contract WITH owner
life settlement provider
policy cash values can be borrowed against at any time and used for immediate needs
liquidity
when employer pays all premiums, plan is called
noncontributory
403b or TSAs is for employees of certain _ orgs
nonprofit
life insurance proceeds paid to named beneficiary usually _ if paid in lump sum
nontaxable
(IRA) _ may withdraw funds at any time
owner
refers to owner of life insurance policy who seeks to enter life settlement contract
owner
true regarding key person EXCEPT
plan funded by permanent insurance only
life settlement brokers ONLY represent
policyowners
tax free distribution of cash from 1 retirement plan to another
rollover
withdrawal of money from one qualified plan and placed into another
rollover
ira purchased by small employer to cover employees known as
simplified employee pension plan
(group life) master policy issued to _ of group
sponsor (employer)
used by privately owned corporations when each stockholder buys a policy on EACH of the others
stock purchase
used when corporation buys one policy on each shareholder
stock redemption
early termination of policy by policyowner
surrender
_ benefits paid to workers surviving spouse and dependent children under specific circumstances
survivor
providing funds necessary for survivors of insured to be able to maintain lifestyle in case of insured death
survivor protection
employer contributions for profit sharing and 401K must be
systematic and substantial
(Roth IRA) funded with after _ contributions
tax
(retirement plans) qualified plans have _ advantages
tax
if cash surrender value exceeds amount of premiums paid for policy could be
taxable
interest on dividends is
taxable
settlement options, payments consist of principal and interest, interest portion is _ as income
taxable
all of following would be different between qualified and nonqualified retirement plans except
taxation on accumulation
group life CANNOT be converted to
term
tax free transfer of funds from 1 retirement program to IRA or transfer of interest from 1 trustee to another
transfer or direct transfer
right of participant in retirement plan to retain part or all benefits
vesting
