Annuity Basics 103 - Active Annuities

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| By Frank07171983

Frank07171983

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Quizzes Created: 4 | Total Attempts: 886

Questions: 15 | Attempts: 63 | Updated: Jun 19, 2023

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Annuity Basics 103 - Active Annuities - Quiz

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Questions and Answers

1.

What form is used to remove excess contributions from an IRA?
- A.
  
  1099
- B.
  
  EFL-927
- C.
  
  EFL-520
- D.
  
  EFL-809
Correct Answer
B. EFL-927

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

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2.

An annuitant is 74 years old. She has a Roth IRA. How much can she contribute to her IRA for 2013?
- A.
  
  $5,500
- B.
  
  None
- C.
  
  $6,500
- D.
  
  $25,000
Correct Answer
C. $6,500

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

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3.

Select each of the following that are true regarding ownership changes:
- A.
  
  You can change the owner of a non-qualified annuity.
- B.
  
  If the owner dies, funds must be withdrawn within 12 months.
- C.
  
  You can change the owner of an IRA.
- D.
  
  If an annuitant or any natural owner hs died, an ownership change cannot be processed.
Correct Answer(s)
A. You can change the owner of a non-qualified annuity.
D. If an annuitant or any natural owner hs died, an ownership change cannot be processed.

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If the owner dies, funds must be withdrawn within 5 years.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

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4.

The 5498 will show all contributions made during the specified tax year on qualified IRAs.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

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

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5.

Which form is used to designate a tax year on a Traditional IRA contribution?
- A.
  
  EFL-809
- B.
  
  EFL-5003
- C.
  
  EFL-7700
- D.
  
  EFL-520
Correct Answer
D. EFL-520

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

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6.

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?
- A.
  
  $2,500
- B.
  
  $35,000
- C.
  
  $21,000
- D.
  
  $25,000
Correct Answer
C. $21,000

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.

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7.

Maturity letters are sent to annuitants 90 days prior to the maturity date.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

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

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8.

In order to be eligible for a 1st year rate bonus on an SPDA, the minimum amount that must be submitted at application is:
- A.
  
  $25,000
- B.
  
  $10,000
- C.
  
  $50,000
- D.
  
  $20,000
Correct Answer
A. $25,000

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

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9.

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 .
- A.
  
  State Guaranty Fund
- B.
  
  State Insurance Protection Fund
- C.
  
  FDIC
- D.
  
  Super Awesome State Fund
- E.
  
  FICA
Correct Answer
A. State Guaranty Fund

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

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10.

The insterest rate on the 24 screen of LifeSys will always be correct.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

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.

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11.

Statements of policy values are sent out during which months?
- A.
  
  July, October, January, April
- B.
  
  September, April, June, November
- C.
  
  April, May, June
- D.
  
  January, April, June, October
Correct Answer
A. July, October, January, April

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

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12.

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.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

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

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13.

If an RMD is required to be taken on a Traditional IRA, the amount can be found on what form(s)?
- A.
  
  IRA Reference chart
- B.
  
  1099 and EFL-520
- C.
  
  5498 and policy statement
- D.
  
  EFL-809 and EFL-927
Correct Answer
C. 5498 and policy statement

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

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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.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

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.

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15.

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"?
- A.
  
  Life income benefits with _____________ years guaranteed.
- B.
  
  Life Income Benefits only
- C.
  
  Joint and Survivor life income benefits with _____% continuing to the survivor.
- D.
  
  Guaranteed income beneftis for fixed period of ______________years.
Correct Answer
B. Life Income Benefits only

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.

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Annuity Basics 103 - Active Annuities

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

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

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

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

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

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

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

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 .

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

Statements of policy values are sent out during which months?

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.

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

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.

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"?