CLA Combo Taxation Sec 9

________ _______ ARE NOT INCOME TAX DEDUCTIBLE SINCE YOU ARE USING AFTER-TAX DOLLARS AND THE PREMIUMS ARE CONSIDERED PERSONAL EXPENSES. WHAT ARE THE FIVE EXCEPTIONS:

_____ ______ _________/_____ EARNINGS ACCUMULATED OF THE INSURANCE POLICY WILL NOT BE SUBJECT TO ANY INCOME TAX IF THE POLICY MATURES AS A DEATH BENEFIT AND NO CASH IS SURRENDERED

THERE ARE TWO TYPES OF TAXES INVOLVED THAT MAY BE CONFUSING WHEN IT COMES TO TAXATION OF LIFE INSURANCE AND THEY ARE:

________ _______ PROCEEDS ARE NOT SUBJECT TO FEDERAL OR STATE INCOME TAXES UNLESS THE POLICY WAS TRANSFERRED FOR MONEY

_________ EXEMPTS DEATH BENEFITS FROM ESTATE TAXES BUT THE FEDERAL GOVERNMENT DOES NOT. ONLY AFFECTS PEOPLE WHO DIE LEAVING A TAXABLE ESTATE OF MORE THAN $1.5 M

_____ _____ ON A LIFE INSURANCE CONTRACT IS GENERALLY PAID INCOME TAX FREE, BUT SOMETIMES NOT ESTATE TAX FREE

THERE ARE FOUR IMPORTANT THINGS TO CONSIDER REGARDING FEDERAL ESTATE TAX ON LIFE INSURANCE:

_______/______ ______ _______ IS WHEN A POLICY (WHICH CONTAINS CASH VALUE) IS SURRENDERED, THE CASH VALUE IS PAID TO THE POLICY OWNER WITHOUT INCOME TAX AS LONG AS THE CASH VALUE IS EQUAL TO OR LESS THAN THE COST BASIS. THE COST BASIS IS THE TOTAL AMOUNT OF PREMIUMS PAID INTO THE POLICY ($1,200 A YEAR FOR 5 YEARS WOULD BE A COST BASIS OF $6,000)

________ FOR A NONQUALIFIED ANNUITY ARE PAID IN AFTER-TAX DOLLARS

ANNUITY PAYMENTS ARE GENERALLY TREATED FOR FEDRAL INCOME TAX PURPOSES AS HAVING TWO ELEMENTS:

_______ ______ IS TAXED IDENTICALLY TO ANY OTHER QUALIFIED ACCOUNT SUCH AS AN IRA, 401(K), PROFIT SHARING PLAN OR OTHER TAX-DEFERRED RETIREMENT ACCOUNT

_________ _______ ARE TAXED DIFFERENTLY FROM MOST INVESTMENTS: ___________ VARIABLE ANNUITY GROWS TAX-DEFERRED UNTIL WITHDRAWALS BEGIN OR THE POLICY IS ANNUITIZED. DOES NOT PROVIDE A STEP-UP IN COST BASIS AT DEATH, AND THE DEFFERRED EARNINGS WILL BE TAXABLE AS ORDINARY INCOME TO A NON-SPOUSAL BENEFICIARY

________ IS INCLUDED IN YOUR ESTATE FOR ESTATE TAX PURPOSES.

_________ OF EARNINGS FROM A NONQUALIFIED ANNUITY ARE FULLY TAXABLE AT ORDINARY INCOME TAX RATES

_________ ________ IS WHEN AN OWNER ANNUITIZES A NONQUALIFIED ANNUITY, A PORTION OF THEIR PAYMENT WILL BE CONSIDERED A RETURN OF PRIMIUM AND WILL NOT BE SUBJECT TO ORDINARY INCOME TAX

________ ______ IS THE PERCENTAGE OF INCOME THAT IS EXLUDED FROM TAX LIABILITY. IF A $50K DEPOSIT HAS GROWN TO A VALUE OF $100K.

IN ADDITION TO OWING FEDERAL TAX, WHEN ANNUITANTS MAKE A WITHDRAWAL FROM AN ANNUITY OR ANNUITIZE IT, CALIFORNIA ALSO CHARGES A TAX BASED ON THE ACCUMULATED VALUE OF THE POLICY CALLED _______ _______ ____

____ _________ PROVISION ALLOWS YOU TO EXCHANGE AN EXISTING INSURANCE ANNUITY CONTRACT FOR A NEWER CONTRACT WITHOUT HAVING TO PAY TAXES ON THE ACCUMULATION IN YOUR OLD CONTRACT

ALLOWABLE EXCHANGES ARE:

____ AND _______ _____ ____(TAMRA) OF 1988 WAS CREATED TO DISCOURAGE THE SALE OF LIFE INSURANCE CONTRACTS AS INVESTMENTS OR TAX SHELTERS

______ _________ ______ (MEC) PURPOSE WAS TO PREVENT PEOPLE FROM PUTTING A LARGE AMOUNT OF MONEY INTO A LIFE POLICY AND THEN TAKING IT BACK OUT AS A LOAN WITHOUT PAYING TAXES ON THAT MONEY

TO BE ELIGIBLE FOR GROUP LIFE INSURANCE, AT LEAST ____ PEOPLE MUST BE ORGANIZED FOR A PURPOSE OTHER THAN PURCHASING INSURANCE

TWO MAIN POINTS ARE TAKEN INTO CONSIDERATION FOR GROUP INSURANCE:

_______ IS REFERRED TO AS THE AMOUNT OF OWNERSHIP THAT EMPLOYEES HAVE IN THE EMPLOYER'S CONTRIBUITONS TO A PENSION PLAN

____-_________ PLAN, THE EMPLOYER PAYS THE ENTIRE PREMIUM FOR THE INSURANCE PLAN AND THEE IS NO COST TO THE EMPLOYEE

__________ PLAN THE PREMIUMS ARE SHARED BY THE EMPLOYER AND EMPLOYEE

CERTAIN REQUIREMENTS MUST BE MET FOR EMPLOYER PLANS TO BE ELIGIBLE. EMPLOYEES MUST BE __ YEARS OF AGE OR OLDER AND HAVE COMPLETED ____ YEAR OF SERVICE WITH THE EMPLOYER. IF THE PLAN PROVIDES FOR 100% VESTING, THE EMPLOYEE MUST HAVE COMPLETED ____ YEARS OF SERIVES

______ OF ______ IS THE EMPLOYER PAYING A SPECIFIC AMOUNT AND THE EMPLOYEE PAYS THE REST OF THE PREMIUM. EMPLOYEE ALSO GETS TO SELECT WHAT PLAN IS BEST FOR THEM

THE FOLLOWING LISTS THE LENGTHS OF TIME THAT THE DEPENDENT MAY BE COVERED FOR:

ANY LICENSED LIFE INSURANCE COMPANY MAY ISSUE _____, ______, _____ AND ________ INSURANCE ON A GROUP PLAN, EITHER WITH ANNUITIES OR WITHOUT,AND WITH PREMIUM RATES LESS THAN THE USUAL RATES FOR SUCH INSURANCE

_________ CLAUSE IS A PROVISION OF A GROUP INSURANCE POLICY FOR TWO YEARS FROM THE POLICY ISSUE DATE, OR FROM THE INSURED'S EFFECTIVE DATE OF COVERAGE

INSURANCE COMPANIES MAY DECIDE TO REDUCE OR EVEN EXCLUDE LIABILITY FOR LOSSES THAT COME ABOUT DURING:

UNDER A GROUP EMPLOYER LIFE INSURANCE POLICY THE EMPLOYEE WILL RECEIVE A _______ OF ________ INSTEAD OF RECEIVING THE ENTIRE CONTRACT

DURING THE 31-DAY PERIOD OF ELIGIBILITY ______ FOR , IF AN EMPLOYEE DIES, THE INSURANCE COMPANY MUST PAY THE CLAIM UNDER THE EMPLOYEE'S FORMER GROUP COVERAGE, EVEN IF THE EMPLOYEE ACTUALLY APPLIED FOR INDIVIDUAL COVERAGE

IN THE EVENT THAT AN EMPLOYEE'S JOB IS TERMINATED, THE INSURER OR EMPLOYER IS REQUIRED TO GIVE THE EMPLOYEE A NOTICE TO CONVERT WITHIN 15 DAYS OF TERMINATION OF EMPLOYMENT, WHICH IS CONSIDERED ________ ______ _____

_______ _____ _______ IS PROVIDED BY INSURANCE COMPANIES THAT OFFER ANNUAL RENEWABLE TERM LIFE INSURANCE TO NEWSPAPERS, MAGAZINES AND OTHER SIMILAR PUBLICATIONS.

A GROUP POLICY MUST PROVIDE EQUAL COVERAGE TO THE REGISTERED _______ ______ OF AN EMPLOYEE, INSURED, OR POLICYHOLDER.

______ ______ ______ _____ ___ (ERISA) OF 1974 SET FIDUCIARY STANDARDS TO EQUALIZE PENSION STANDARDS AND PROTECT PARTICIPANTS AND BENEFICIARIES. REQUIRES SYSTEMATIC DETAILED REPORTING AS WELL AS STRINGENT RULES THAT MUST BE FOLLOWED IN ORDER TO BE ELIGIBLE FOR FAVORABLE TAX TREATMENT BY THE IRS

QUALIFIED RETIREMENT PLANS ARE REGISTERED WITH THE IRS AND ENTITLE THE OWNER TO TAX BENEFITS AND FAVORABLE TAX TREATMENT. PLANS MUST MEET THE FOLLOWING:

QUALIFIED PLANS:

_________ IS A QUALIFIED RETIREMENT PLAN ESTABLISHED BY THE SELF EMPLOYED INDIVIDUALS TAX RETIREMENT ACT OF 1962. AS DEFINED CONTRIBUTION PLAN, THEY MAY BE STRUCTURED AS A PROFIT SHARING, A MONEY PURCHASE, OR A COMBINED PROFIT SHARING/MONEY PURCHASE PLAN

_________________ IS A TAX-SHELTERED SAVINGS PLAN THAT ALLOWS MOST CITIZENS TO MAKE PRE-TAX CONTRIBUTIONS TO AN APPROVED ACCOUNT.

_________ IS A DEFINED CONTRIBUTION PLAN THAT TAKES ITS NAME FROM THE SECTION OF THE INTERNAL REVENUE CODE THAT ESTABLISHED THE RULES UNDER WHICH THE PLAN OPERATES. ALSO KNOWN AS A TAXED-SHELTERED OR A TAX-DEFERRED ANUITY PROGRAM

_______________ IS A SIMPLIFIED EMPLOYEE PENSION PLAN. PROVIDES EMPLOYERS WITH A SIMPLIFIED METHOD TO MAKE CONTRIBUTIONS TOWARD THEIR EMPLOYEES' RETIREMENT AND, IF SELFEMPLOYED, THEIR OWN RETIREMENT

________ ALSO KNOWN AS A CASH OR DEFERRED ARRANGEMENT (CODA) PLAN, A 401(K) IS A QUALIFIED DEFINED CONTRIBUTION PLAN THAT TAKES ITS NAME FROM THE SECTION OF THE INTERNAL REVENUE CODE THAT PRESCRIBES THE RULES UNDER WHICH IT OPERATES.

____________ PLANS ARE HYBRID RETIREMENT PLANS THAT POSSESS CHARACTERISTICS OF BOTH THE 401(K) OR 403(B) AND THE ROTH IRA

____________ NOW CALLED THE COVERDELL EDUCATION SAVINGS ACCOUNT (ESA), IS AN ACCOUNT ESTABLISHED TO PROVIDE FUNDS THAT ALLOW A BENEFICARY TO ATTEND A PROGRAM OF HIGHER EDUCATION. NO TAX DEDUCTION IS ALLOWED FOR THE CONTRIBUTION

_________ PLANS, SUCH AS INDIVIDUAL ANNUITIES, ARE NOT REGISTERED WITH THE IRS. THEY ARE DEFERRED COMPENSATION AND ALARY CONTINUATION PLANS, DO NOT HAVE A MEET SPECIFIC GUIDELINES, AND DO NOT REQUIRE THE APPROVAL OF THE GOVERNMENT

____ PLAN IS A NONQUALIFIED RETIREMENT PLAN ESTABLISHED FOR THE BENEFIT OF STATE AND LOCAL GOVERNMENT EMPLOYEES OR THE EMPLOYEES OF TAX-EXEMPT ORGANIZATIONS.ALL EARNINGS REMAIN UNTAXED

______ ________ PLAN (TSP) IS A RETIREMENT SAVINGS AND INVESTMENT PLAN FOR FEDERAL EMPLOYEES.

_______ _______ UNDER THE SOCIAL SECURITY ACT IS THE PERIOD DURING WHICH SOCIAL SECURITY BENEFIT PAYMENTS ARE SUSPENDED. PERIOD RUNS FROM THE 16TH BIRTHDAY OF THE YOUNGEST CHILD UNTIL THE WIDOW'S 60TH BIRTHDAY

______ IS OUR COUNTRY'S HEALTH INSURANCE PROGRAM FOR PEOPLE AGE 65 OR OLDER. CERTAIN PEOPLE YOUNGER THAN 65 MAY QUALIFY, INCLUDING THOSE WHO HAVE DISABILITIES AND THOS WITH PERMANENT KIDNEY FAILURE

YOU ARE ELIGIBLE FOR BENEFITS AS SOON AS YOUR REACH RETIREMENT AGE. FOR PEOPLE BORN BEFORE 1938, RETIREMENT AGE IS _____. FOR THOSE BORN IN OR AFTER 1938, RETIREMENT AGE GRADUALLY RISES IN TWO-MONTH INCREMENTS TO ___, AND STAYS THERE FOR PEOPLE BORN IN OR AFTER 1960