WFG 8-11

All of the following statements about traditional individual retirement accounts are false EXCEPT

10% penalty is applied to withdrawals before age 59 1/2

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

One becomes eligible for Social Security disability benefits after having been disabled for

5 months

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

How long does an individual have to "rollover" funds from an IRA or qualified plan?

60 days

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is the policyowner, C is the insured, and ABC is the beneficiary

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?

Annuity

How are Roth IRA distributions normally taxed

Distributions are received tax-free

Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?

Each partner must own a policy on the other partners

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?

Each partner owns a $500,000 policy on their partner's life

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

Fund a buy-sell agreement

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the

Marital deduction

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)

Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouse's IRA

One becomes eligible for social security disability benefits after having been disabled for

The amount of the benefits available from other sources

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

A qualified profit-sharing plan is designed to

allow employees to participate in the profits of the company

To be eligible for Social Security disability benefits, an employee must be unable to perform

any occupation

In a Key Employee life insurance policy, the third-party owner can be all of the following EXCEPT

insured

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

none

In an individual retirement account (IRA), rollover contributions are

not limited by dollar amount

The premiums paid by an employer for his employee's group life insurance are usually considered to be

tax-deductible to the employer

Premature IRA distribution are assessed a penalty tax of

10%

Which of these is not a source of funding for social security benefits

Federal Government

When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?

Establishes the needs of the individual and his dependents

Which of these is NOT a reason for purchasing life insurance on the life of a minor?

If both parents were to die, it would provide death benefits to the child

At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in

Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan

Which statement regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances

Post-tax dollar contributions are found in

Roth IRA investments

What does a 401(k) plan generally provide its participants?

Salary-deferral contributions