Annuity Basics 103 - Active Annuities

1. The insterest rate on the 24 screen of LifeSys will always be correct.

True

False

This number is not always correct. You must go through the process discussed in the presentation. You can also refer to AE.com and the interest rate chart on SharePoint.

Explanation

This number is not always correct. You must go through the process discussed in the presentation. You can also refer to AE.com and the interest rate chart on SharePoint.

2. Which form is used to designate a tax year on a Traditional IRA contribution?

EFL-809

EFL-5003

EFL-7700

EFL-520

The EFL-520 will be sent with policy statements in January for the annuitant to complete if applicable.

Explanation

The EFL-520 will be sent with policy statements in January for the annuitant to complete if applicable.

3. Maturity letters are sent to annuitants 90 days prior to the maturity date.

True

False

Maturity letters are sent approximately 45 days prior to the maturity date.

Explanation

Maturity letters are sent approximately 45 days prior to the maturity date.

4. What form is used to remove excess contributions from an IRA?

1099

EFL-927

EFL-520

EFL-809

The Authorization for Withdrawal of Excess Contribution is form EFL-927.

Explanation

The Authorization for Withdrawal of Excess Contribution is form EFL-927.

5. A fund administered by a U.S. state to protect policy holders in the event that an insurance company defaults on benefit payments or becomes insolvent is called .

State Guaranty Fund

State Insurance Protection Fund

FDIC

Super Awesome State Fund

FICA

Each state has a State Guaranty Fund that protects annuitants from these types of situations.

Explanation

Each state has a State Guaranty Fund that protects annuitants from these types of situations.

6. The 5498 will show all contributions made during the specified tax year on qualified IRAs.

True

False

The contribution amount will be shown in box 1 of the 5498.

Explanation

The contribution amount will be shown in box 1 of the 5498.

7. Which settlement option states; "Payments will be made as long as the annuitatnt is alive. Upon the annuitant's death, payments will cease. The amount of each payment is based on the annuitants sex and age at the the time the option is selected"?

Life income benefits with _____________ years guaranteed.

Life Income Benefits only

Joint and Survivor life income benefits with _____% continuing to the survivor.

Guaranteed income beneftis for fixed period of ______________years.

With Life Income Benefits only payments will be made as long as the annuitant is living. Upon the annuitant's death, payments will cease.

Explanation

With Life Income Benefits only payments will be made as long as the annuitant is living. Upon the annuitant's death, payments will cease.

8. If an RMD is required to be taken on a Traditional IRA, the amount can be found on what form(s)?

IRA Reference chart

1099 and EFL-520

5498 and policy statement

EFL-809 and EFL-927

The 5498 and policy statement will show the RMD amount required to be taken, if applicable, for the Traditional IRA.

Explanation

The 5498 and policy statement will show the RMD amount required to be taken, if applicable, for the Traditional IRA.

9. In order to be eligible for a 1st year rate bonus on an SPDA, the minimum amount that must be submitted at application is:

$25,000

$10,000

$50,000

$20,000

A minimum of $25,000 is needed for a First Year Interest Rate Bonus on an SPDA.

Explanation

A minimum of $25,000 is needed for a First Year Interest Rate Bonus on an SPDA.

10. Peter Griffin, 54, has an FPDA Traditional IRA at Erie Family Life that was issued on 01/01/2010. So far, he has contributed $4,000 to it in 2013. He has another Traditional IRA at another company with a value of $35,000 that he would like to transfer to his IRA at EFL. How much of it can he transfer to the IRA at EFL?

$2,500

$35,000

$21,000

$25,000

Since he already contributed $4,000, he has another $21,000 before he reaches his contractual limit of $25,000 at EFL. Since the additional amount is a transfer, not a contribution, it is not subject to the IRS limit of $6,500.

Explanation

Since he already contributed $4,000, he has another $21,000 before he reaches his contractual limit of $25,000 at EFL. Since the additional amount is a transfer, not a contribution, it is not subject to the IRS limit of $6,500.

11. An annuitant is 74 years old. She has a Roth IRA. How much can she contribute to her IRA for 2013?

$5,500

None

$6,500

$25,000

Although a Traditional IRA allows no contributions after age 70 1/2, there are no age limitations with a Roth IRA.

Explanation

Although a Traditional IRA allows no contributions after age 70 1/2, there are no age limitations with a Roth IRA.

12. Statements of policy values are sent out during which months?

July, October, January, April

September, April, June, November

April, May, June

January, April, June, October

Statements are sent to annuitants in January, April, July, and October.

Explanation

Statements are sent to annuitants in January, April, July, and October.

13. If an annuitant contributes more than the $25,000 per policy year limit to his non-qualified annuity, he must complete the EFL-927 to have the extra funds removed.

True

False

The EFL-927 is only used for removing excess contributions on qualified plans.

Explanation

The EFL-927 is only used for removing excess contributions on qualified plans.

14. A 'true excess' occurs when the owner requests to remove eligible current year regular, spousal, or catch-up contributions by deeming the contribution as an excess.

True

False

A 'true excess' occurs when the owner contributes more than the IRS annual contribution limit or more than the amount of his/her earned income for the contribution year.

Explanation

A 'true excess' occurs when the owner contributes more than the IRS annual contribution limit or more than the amount of his/her earned income for the contribution year.

15. Select each of the following that are true regarding ownership changes:

You can change the owner of a non-qualified annuity.

If the owner dies, funds must be withdrawn within 12 months.

You can change the owner of an IRA.

If an annuitant or any natural owner hs died, an ownership change cannot be processed.

If the owner dies, funds must be withdrawn within 5 years.
You cannot change the owner of an IRA.

Explanation

If the owner dies, funds must be withdrawn within 5 years.
You cannot change the owner of an IRA.

Submit