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Flashcards in Chapter 6 Deck (33):
1

With the interest settlement option and at the time of the withdrawal the interest was paid. What is the amount the beneficiary would need to pay tax on how much?

The withdrawal of interest amount

2

For people not covered by an employer-sponsored plan, it's contributions are

Tax deductable

3

Advantage of qualified plans to employers is

Tax deductable contributions

4

T or F: dividends are not taxable

T

5

Who can make a fully deductable contribution to a traditional ira

An individual not covered by an employer-sponsored plan who has earned income

6

Purpose of the 7 day test

It determines of the insurance policy is an mec

7

When would policy proceeds include taxable estate

When there are incidents of ownership at the time of death

8

A qualified annuity or plan means

It's approved by the irs

9

Simple plans, employees may defer amounts each year. The employer has to match the employees annual wage up to how much percent

3

10

When must the ira be completely distributed when a beneficiary is not named

Dec 31 of the year that contains the 5th anniversary of the owners death

11

Is a death benefit payable to the beneficiary subject to taxation

No

12

Employer made qualified retirement plan for employees where the employer contributes money whenever a profit is realized. What's this called

Profit sharing plan

13

For a retirement plan to be qualified it must benefit

Employees

14

In a simple plan, what is the taxation on contributions and earnings

They are tax deferred until withdrawn

15

What's a retirement account where they can keep contributing after age 70.5

Roth ira

16

How to withdraw before 59.5 without 10% penalty

Total disability
Catastrophic medical
A down payment on first home up to 10,000
Post secondary education

17

Taxation on traditional ira can be

Contributions or distributions

18

Traditional ira contribution

Must be made in cash
Are tax deductable
Tax deferred earnings

19

Traditional ira distributions

Income taxable fit the year received

20

Taxation of deferred annuities

Tax deffered accumulation
Withdrawals
Early withdrawals (10% penalty)
Cash surrender (taxable interest)

21

Taxation of deferred annuities withdrawals

Gain before the principal
(Last in first out)

22

Tax treatment of permanant life product- not tax deductable

Premiums and policy loans

23

Tax treatment of permanent life product- not taxable

Policy dividends and dearth benefits

24

Tax treatment of permanent life product- taxable

Excess cash value and interest on dividends

25

Hr-10 Keogh retirement plan

Self employed
Employer matches employee's contribution
Established by irs: adjusted annually

26

Sep retirement plan

Self employed/ small employer
Employee and employer contribution
Established by irs: adjusted annually

27

Simple retirement plan

Small employer with less than 100 employees or any employer
Employer matches employee's contribution
Established by irs: adjusted annually

28

403(b) - tsa retirement plan

Nonprofit
Employee and employer make contributions
Established by irs: adjusted annually

29

Roth ira

Earned income
Contributions (after tax, continues after 70.5, up to limit, not deductable)
Withdrawals (no 70.5 rule/ not taxed)

30

Traditional ira

Earned income
Contributions (pretax, up to 70.5, up to limit, deductable)
Withdrawals (59.5 - 70.5, 10% penalty if early)

31

Qualified

Strict guidelines
Discrimination prohibited
Deductable buisness expense
Taxable to employee

32

Nonqualified

No guidelines
Discrimination allowed
Not a deductable buisness expense
Taxable to employee

33

Qualified plan requirements -approved by the irs

Only for employee benefits
Formally written
No discrimination
Permanate
Must have a vesting requirement