Qualified Plans, and Federal Tax Considerations for Life Insurance and Annuities

All of the following are general requirements of a qualified plan EXCEPT

The plan must provide an offset for social security benefits

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Taxation on accumulation

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are tax free

An insured had paid only part of her total number of IRA premiums before she died. What effect will this have on the insured's estate?

Only the premiums paid will be included in the estate

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?

Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59.5

Employer contributions made to a qualified plan

Are subject to vesting requirements

For a retirement plan to be qualified, it must be designed for the benefit of


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

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?


In life insurance policies, cash value increase

Grow tax deferred

In a direct rollover, how is the money transferred from one plan to the new one?

From trustee to trustee

J transferred his life insurance policy to his son two years before his death. Which of the following is true?

The entire face value of the policy will be included in J's taxable estate

Life insurance death proceeds are

Generally not taxed as income

The advantage of qualified plans to employers is

Tax-deductible contributions

What method is used to determine the taxable portion of each annuity payment?

The exclusion ratio

What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary

Income tax on distributions and no penalty

What is the penalty for IRA distributions that are below the required minimum for the year?


When a beneficiary receives payments consisting of both principal and interests portions, which parts are taxable as income?

Interest only

When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?

Distributions are taxable

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

Which concept is associated with "exclusion ratio"?

Annuities payments

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable

Which of the following describes the tax advantages of a qualified retirement plan?

The earnings in the plan accumulate tax deferred

Which of the following terms is used to name the nontaxed return of unused premiums?


Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable