CLU Annuities and Retirement Planning 2

Question 1

What is the penalty for withdrawals from a tax-deferred annuity before age 59½, in addition to ordinary income tax?

Accepted Answer

10% federal early withdrawal penalty

Answer

5% federal penalty

Answer

15% federal penalty

Answer

20% withholding tax

Question 2

In a variable annuity, how is the account value determined during the accumulation phase?

Accepted Answer

By the performance of the underlying investment subaccounts chosen by the owner

Answer

By a guaranteed fixed interest rate set at issue

Answer

By the insurance company's general account portfolio returns

Answer

By index performance subject to a participation rate cap

Question 3

What is a 'joint and survivor' annuity payout option?

Accepted Answer

Payments continue over the lifetimes of two named individuals

Answer

Payments guaranteed for a fixed period, then cease

Answer

A single life annuity with a return-of-premium guarantee

Answer

An annuity that adjusts payments for inflation

Question 4

What is the required minimum distribution (RMD) starting age for qualified annuities and IRAs under current federal law (SECURE 2.0)?

Accepted Answer

Age 73

Answer

Age 70½

Answer

Age 72

Answer

Age 75

Question 5

Which type of annuity begins income payments immediately — typically within one month of a single lump-sum premium payment?

Accepted Answer

Single premium immediate annuity (SPIA)

Answer

Deferred annuity

Answer

Flexible premium deferred annuity

Answer

Variable deferred annuity

Question 6

What is the '1035 exchange' and what tax benefit does it provide to annuity owners?

Accepted Answer

A tax-free transfer of a life insurance policy to another life policy or to an annuity

Answer

A tax deduction for annuity premiums paid during the year

Answer

An exemption from the 10% early withdrawal penalty for disabled individuals

Answer

A stepped-up cost basis at the annuitant's death