Qualified Plans and Federal Tax Considerations for Life Insurance and Annuities
Which of the following is NOT an allowable 1035 exchange?
A whole life insurance policy is exchanged for a term insurance policy
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will she transferred from the plan administrator to another and what is the tax consequence of a direct transfer?
$10000 and no tax consequences
An insured decides to surrender his $100000 Whole Life Policy. The premiums paid into the policy added up to $15000. At policy surrender, the cash surrender value was $18000. What part of the surrender value would become taxable?
$3000 , the diffetence between premiums paid and cash vakue would be taxable.
When contributions to an immediate annuity are made with before tax dollars which of the following is true of the distributions?
Distributions are taxable
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
It is only taxable if the cash value exceeds the amount paid for premiums.
What method is used to determine the taxable portion of each annuity payment ?
The exclusion ratio
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?
The interest will continue to accumulate tax deferred.
All of the following statements are true regarding tax qualified annuities EXCEPT
employer contributions are not tax deductible
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
50% tax on the amount not distributed as required
Life Insurance death proceeds are
Generally not taxed as income
Death Benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death.
If $100000 of life insurance proceeds were used in settlement option which paid $13000 per year for ten years which of the following would be taxable annually ?
$3000 per year would be income taxable as interest
Employer contributions made to a qualified plan
Are subject to vesting requirements
In a direct rollover, how is the money transferred from one plan to the new one?
From Trustee to trustee
