RAA RAA Tax Planning & Tax-Advantaged Strategies

Question 1

How are earnings inside a non-qualified deferred annuity taxed during the accumulation phase?

Accepted Answer

Tax-deferred until withdrawal

Answer

Tax-free permanently

Answer

Taxed annually as ordinary income

Answer

Taxed at capital gains rates annually

Question 2

Which IRS rule determines the taxable portion of non-qualified annuity withdrawals?

Accepted Answer

LIFO rule

Answer

FIFO rule

Answer

Pro-rata rule

Answer

Exclusion ratio

Question 3

A client receives annuity payments from a qualified annuity funded with pre-tax dollars. How are those payments taxed?

Accepted Answer

Payments are 100% taxable as ordinary income

Answer

Only the gain portion is taxable

Answer

Payments are entirely tax-free

Answer

Payments are taxed at long-term capital gains rates

Question 4

What is the federal tax penalty for withdrawing annuity earnings before age 59½?

Accepted Answer

10%

Answer

5%

Answer

15%

Answer

20%

Question 5

Which annuity payout option provides the highest exclusion ratio for a non-qualified annuity?

Accepted Answer

Life only annuity with a long life expectancy

Answer

Lump-sum withdrawal

Answer

Systematic partial withdrawals

Answer

Interest-only withdrawals

Question 6

Under a 1035 exchange, which tax advantage is preserved?

Accepted Answer

Accumulated gains are transferred without triggering current income tax

Answer

The original premium becomes tax-free

Answer

The new annuity's surrender charge period resets to zero

Answer

The policy owner avoids all future taxes permanently