RAA Case Analysis & Practical Application 3

Question 1

A 45-year-old high-income professional wants tax deferral beyond 401(k) limits. She already maxes her qualified plans. Which annuity feature is most relevant here?

Accepted Answer

Non-qualified annuities offer unlimited contribution amounts with tax-deferred growth

Answer

Non-qualified annuities have no IRS contribution limits, making them a useful tax-deferral vehicle once qualified plan limits are exhausted.

Question 2

A client owns a variable annuity with a guaranteed minimum withdrawal benefit (GMWB) rider. After a market downturn, her contract value falls to $0 but she has not exceeded her benefit base. What happens?

Accepted Answer

The insurer continues paying the guaranteed withdrawal amount for life

Answer

A GMWB rider guarantees that the insurer will continue paying the contractually specified withdrawal amount even after the account value is fully depleted.

Question 3

An advisor recommends a B-share variable annuity with a 7-year surrender schedule to a 74-year-old client who may need liquidity within 3 years. This is most likely a violation of:

Accepted Answer

FINRA suitability and Reg BI best interest standards

Answer

Recommending a long surrender-charge product to an elderly client with near-term liquidity needs violates the best interest standard requiring advisors to match product features to client circumstances.

Question 4

A client holds a qualified longevity annuity contract (QLAC) inside her IRA. Which statement best describes a key advantage?

Accepted Answer

QLAC premiums are excluded from RMD calculations, deferring income until age 85

Answer

QLACs allow up to the IRS-allowed premium to be excluded from RMD calculations, enabling the owner to defer that income stream until as late as age 85.

Question 5

Two clients both purchase $200,000 SPIAs at age 70. Client A chooses life only; Client B chooses life with 20-year certain. Which statement is accurate?

Accepted Answer

Client A receives a higher monthly payment because there is no death benefit guarantee

Answer

Life-only payouts are higher because the insurer bears no obligation to pay beneficiaries; adding a period-certain guarantee reduces the monthly amount.

(RAA) Registered Annuity Advisor Practice Test

(RAA) Registered Annuity Advisor Practice Test

RAA Case Analysis & Practical Application 3