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Danko Self-created > Quiz 4 > Flashcards

Quiz 4 Flashcards

1
Q

What is an MSA?

A

medical savings account

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2
Q

If Dale dies, what is his family’s COBRA option?

A

36 months of coverage

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3
Q

If Dale is fired, what is his COBRA option?

A

18 months coverage

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4
Q

If Dale is fired, what is his family’s COBRA option?

A

18 months coverage

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5
Q

If Dale gets divorced, what is his family’s COBRA option?

A

36 months coverage

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6
Q

What are some other qualifying events for COBRA coverage?

A

change full-time to part-time, legal separation, eligibility for medicare, loss of coverage status (marriage, age 26)

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7
Q

What are the contribution sources for an HSA? (3)

A

Individual, family member on behalf of indiv, employer

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8
Q

Who is eligible for an HSA?

A

individual covered under HDHP, no other plan, and below Medicare age

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9
Q

Can you pay for health insurance with HSA proceeds?

A

yes

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10
Q

Are HSAs use-it-or-lose it?

A

no

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11
Q

Can an individual enrolled in Medicare contribute to an HSA?

A

no

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12
Q

What about LTCI from an HSA?

A

yes, if it’s qualified

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13
Q

What’s an HRA?

A

health reimbursement arrangement

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14
Q

Who can have an HRA?

A

only C Corp

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15
Q

What does an HRA do - and some particulars?

A

reimburses EE for substantiated med expenses up to a max amount per coverage period. no OTC drugs.

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16
Q

The individual owns the insurance contract and pays the premium. Are premia deductible?

A

no

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17
Q

The individual owns the insurance contract and pays the premium. Are benefits tax-free to him?

A

yes

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18
Q

The employee owns the contract, and the employer pays the entire premium. Deductibility?

A

employer deducts as a bonus. EE recognizes the as income.

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19
Q

EE owns the contract, ER pays under a group/salary continuation plan. Deductibility?

A

ER deductible, EE taxable benefits

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20
Q

Taxation of cash value at surrender?

A

taxed as ordinary income

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21
Q

Taxation of insurance dividends

A

treated as return of unused premium, tax-free (usually, non-MEC)

22
Q

Taxation of insurance death benefits

A

generally income tax-free

23
Q

Insurance: net cash value

A

cash value minus the loan

24
Q

TFV: policy transfers not jeopardized by TFV rule

A
  1. to insured
  2. to partner of insured (partnerships)
  3. to corp in which insured is shareholder or officer
  4. because of divorce agreement
25
Q

Are premiums for buy-sell agreements (whether stock redemption or cross-purchase) deductible?

A

No

26
Q

What are the two types of buy-sell agreements funded with insurance?

A

Stock Redemption, Cross Purchase

27
Q

What’s another term for Stock Redemption buy-sell agreement?

A

Entity Purchase

28
Q

What’s another term for Cross Purchase buy-sell agreement?

A

Stockholder purchase

29
Q

Basis change in cross purchase execution

A

shares bought by partner get stepped up basis, dead partner’s estate also

30
Q

Basis change in stock redemption execution

A

estate steps up, buyer not

31
Q

fifth dividend

A

one-year term (only up to cash value of policy)

32
Q

What amount is taxable for a surrender of life insurance?

A

cash value less basis

33
Q

Coverage C

A

Personal property. typical sublimits:

  1. $1000 for watercraft
  2. $1000 for jewelry & furs
  3. $2500 for silverware (theft only)
  4. $200 for money/bullion
34
Q

Group life payout at EE death. Taxable?

A

no, tax free

35
Q

Company-funded payout to EE family at death of EE while employed. Taxable?

A

yes, used to be de minimis, not any more

36
Q

Defn: IRR

A

the discount rate at which the PV of the future cash flow equals the cost of the investment

37
Q

What does yield curve do?

A

compares yields of similar bonds but different maturities

38
Q

When yield curve goes negative to positive, what’s best move?

A

buy longer maturities even if return slightly < than others

39
Q

What’s notable about the anti-alienation rule of ERISA?

A

it’s for when the money is still IN the plan

40
Q

Where do you often find disclaimer provisions?

A

in trust documents

41
Q

for a couple retiring now, with choices of home equity, sell home, obtain new mortgage, or obtain reverse mortgage, what’s CFP think is best choice?

A

reverse mortgge

42
Q

CRAT

A

Charitable Remainder Annuity Trust

43
Q

definiting characteristics: CRAT

A 
non-charitable beneficiary
only 1 transfer in
5% out, fixed
lasts up to 20 years or life
at end, goes to charity
44
Q

CRUT

A

Charitable Remainder Unitrust

45
Q

defining characteristics: CRUT

A

similar to CRT but

  • multiple transfers OK
  • fixed percentage out
46
Q

CLAT: Charitable Lead Trust

A
  • not while living, established on death
  • present value as estate tax deduction
  • income payable, excess to bennies (remaindermen)
  • giant deduction example in book ($100MM)
47
Q

CLUT: Charitable Lead Unitrust

A
  • fixed percentage clat (?)
48
Q

QPRT: Qualified Personal Residence Trust

A
  • end of the term, residence eliminated from grantor’s estate
  • value of gift is discounted
  • if owner doesn’t outlive term, asset goes back to estate
49
Q

GRAT: Grantor Retained Annuity Trust

A
  • irrevocable
  • apprec or income-producing property
  • receive fixed annuity
  • at end of term, balance transferred to bennies
  • if grantor DOESN’T live out term, , property back to his estate
  • grantor has “string”
50
Q

GRUT: Grantor Retained Unitrust

A
  • less convenient than GRAT
  • fixed percentage out, revalued annually
  • best asset is something apprec, rather than income

Danko Self-created (10 decks)

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