Donna, age 50, is single and earns $40,000 annually. She is covered under her employer’s retirement plan. Donna would like to start a traditional IRA and contribute $4,000 this year. Which of the following describes her ability to establish a traditional IRA and the tax treatment of her contribution? A) Her contribution is fully tax […]
Which of the following persons can establish a traditional IRA? I. A person whose only income received is from investments. II. A 75 year-old man who has earned taxable income. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: D
All of the following statements about traditional and Roth IRAs are true EXCEPT A) Traditional IRA contributions may be fully, partially, or not income tax deductible. B) Qualified distributions from Roth IRAs are received income tax free. C) Contributions to Roth IRAs are made with after-tax dollars. D) Traditional IRAs are exempt from the penalty […]
Which of the following statements is (are) true with regard to Roth IRAs? I. The portion of a Roth IRA distribution that is attributable to investment income is taxable. II. There is a maximum income level above which Roth IRA contributions are not allowed. A) I only B) II only C) both I and II […]
Which of the following statements is (are) true with regard to IRAs? I. Contribution limits are higher for workers aged 50 and older. II. The minimum distribution rules after attainment of age 70.5 do not apply to Roth IRAs. A) I only B) II only C) both I and II D) neither I nor II […]
Which of the following statements is (are) true with respect to an equity-indexed annuity? I. The maximum percentage gain is usually capped. II. There is no downside protection against loss of principal if the annuity is held to term. A) I only B) II only C) both I and II D) neither I nor II […]
The gross premium for life insurance is equal to A) the present value of the future death claim plus an expense loading. B) the present value of the future death claim less the sum of the premiums paid when death occurs. C) the present value of the future death claim less the present value of […]
Which of the following statements about variable annuities is true? A) The periodic payments received by the annuitant are fixed. B) Variable annuities typically provide a guaranteed death benefit payable to a beneficiary if the annuitant dies prior to retirement. C) Insurers offering variable annuities are not permitted to charge administrative fees. D) Although the […]
Life annuity payments are made up of all of the following EXCEPT A) return of premiums. B) interest earnings. C) unliquidated principal of annuitants who live too long. D) unliquidated principal of annuitants who die early. ANSWER Answer: C
With an equity-indexed annuity, what name is given to the method of crediting excess interest to the annuity? A) the capitation method B) the indexing method C) the distribution method D) the earnings method ANSWER Answer: B
