Ok Flashcards

1
Q

premiums paid by Emp in biz life ins policy

Tax deductible by Emp
Tax deductible by employee
Never taxable to employee

A

Tax deductible by the employer

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2
Q

Recs payments consisting of both principal and interest portions which parts are taxable as income

Principal
Interest
Both principal and interest

A

Interest

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3
Q

Advantage of qualified plans of employers is

Tax deductible contributions
Tax free earnings
No lump sum payments

A

Tax deductible contributions

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4
Q

Best advantage of qualified retirement plan

Contributions are tax deductible as long as Emp earnings are considered taxable income
Contributions are taxed as income to employee
Earnings accumulate tax deferred

A

Earnings accumulate tax deferred

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5
Q

False re taxation of MEC modified endowment contacts

Accumulations are tax deferred
Withdrawals are not taxable
Policy loans are taxable distributions

A

Withdrawals are not taxable

Any distributions from MECs are taxable including withdrawals and policy loans

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6
Q

If life ins policy develops faster cash faster than seven pay whole life contract

Accelerated benefit policy
Endowment
Non qualified annuity
Modified endowment act

A

Modified endowment act

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7
Q

All true of federal tax advantages of qualified plan EXCEPT

At distribution all amounts received by employee are tax free
Funds accumulate on tax deferred basis
Emp and employer contributions are not counted as income to the employee for income tax purposes

A

At distribution all amounts received by employee are tax free

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8
Q

Overfunded life ins policy/failed 7 pay test

A

Once mec always mec

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9
Q

Which re taxation of MEC is false

Accumulations are tax deferred
Withdrawals are not taxable
Loans are taxable distributions

A

Withdrawals are not taxable

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10
Q

To claim currently insured status under ss a worker must have earned at least how many credits during last 13 quarters

4
6
10

A

6

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11
Q

If life ins policy develops cash faster than seven pay whole life contract

Accelerated benefit
Endowment
Modified endowment contract

A

Modified endowment contract

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12
Q

Any cash value life ins policy that develops cash value faster than a seven pay whole life contract is

A

MEC and loses benefits of standard life

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13
Q

What is official name for social security program

Qualified pension plan
Social insurance program
Defined benefit
Old age survivors disability insurance

A

Old age survivors disability insurance

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14
Q

Purpose of seven pay test

Determines if ins policy is MEC
Requires level premium payments for seven years
Guarantees minimum interest

A

Determines if policy is a MEC

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15
Q

Which statement is FALSE on MEC

Accumulations tax deferred
Withdrawals not taxable
Policy loans are taxable distributions

A

Withdrawals are not taxable

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16
Q

Eligibility requirement for all social security disability income benefits

Be disabled for at least 1 year
Have permanent kidney failure
Have attained fully insured status

A

Have attained full insured status contributing to social security for 40 quarters aka 10 years stains fully insured status

17
Q

Has modified endowment contact
Wants to withdraw money to pay medical bills

He will have to pay penalty if younger than 59 1/2
Will have to pay penalty regardless of age
Will not have to pay penalty regardless of age

A

Will pay penalty if younger than 59 1/2

18
Q

Social security was created to provide all of the following benefits except

Unemployment survivors disability

A

Unemployment

19
Q

Following benefits available under ss except

Death
Old age and retirement
Welfare

A

Welfare

20
Q

Number of credits required for fully insured status for social security disability benefits
4
10
40

A

40

21
Q

Has modified endowment contract and wants to withdraw money to pay medical bills

A