cpcu

1. Quiz Show
Taxes & Retirement
Donna M. Kesot, CPCU
CPCU 556 Annuities
April 25, 2012

2. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust

3. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust

4. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT

5. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT
2 types:

6. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT
2 types:
1. CRUT Charitable Remainder Unitrust(5-50% of each year’s
current value, up to 20 years)

7. Generally, creation of a formal irrevocable trust into which the donor
(as grantor of the trust) places property that is subject to the trust
Charitable Remainder Trust
Aka CRT
2 types:
1. CRUT Charitable Remainder Unitrust(5-50% of each year’s
current value, up to 20 years)
2. CRAT Charitable Remainder Annuity Trust (5—50%, calculated
on the initial value of the property)

8. Contribution Base

9. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.

10. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base

11. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate

12. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate
Private Foundations—full value up to 20% of contribution base

13. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate
Private Foundations—full value up to 20% of contribution base
Short-Term Capital Gain Property-50% of the contribution base

14. Contribution Base
Adjusted Gross Income without allowance for
net operating loss carryback.
Cash Contributions to public charities–50% of the contribution base
Long-Term Capital Gain Property—full value up to 30% of contribution
base, e.g. stocks/bonds, real estate
Private Foundations—full value up to 20% of contribution base
Short-Term Capital Gain Property-50% of the contribution base
Tangible Personal Property- full fair market value up to 30% of
contribution base

15. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations

16. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations

17. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations

18. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations

19. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations

20. Match the tax section
Section 1031 Mergers
Section 1041 Partnerships
Section 721 Like-Kind Exchanges
Section 351 Between SpousesDivorce
Section 354 Corporations

21. TRUE or FALSE?
These plans allow individuals to invest pre-tax and
provide tax-deferred earnings

22. TRUE or FALSE?
These plans allow individuals to invest pre-tax and
provide tax-deferred earnings

23. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.

24. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.
TRUE or FALSE?

25. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.
FALSE

26. A 403(B) is a qualified retirement plan that for
employees of local, state, or federal governments
and agencies.
FALSE
Real Answer:
A 403(b) PLAN IS A TAX FAVORED RETIREMENT PLAN FOR
EMPLOYEES OR CERTAIN NONPROFIT ORGANIZATIONS

27. Tax Avoidance Strategies(3):

28. Tax Avoidance Strategies(3):
Step Up in Basis at Death
Gifts to charity
Use of exclusion provisions in the tax law, e.g. sale of primary home,
corp exclusion of up to 50% gain on QUALIFIED small business stock from
start up

29. Retirement Income Sources

30. Retirement Income Sources
• Individually Provided (IRAs, cash values of Life ins, nonqualified annuities,
savings)
• Social Security – guaranteed income floor, available at age 62
 Retired Worker’s Benefits - equal to worker’s primary insurance
amount (PIA) at age 65-67.
 Spouse of Retired Worker (50% of retired worker’s PIA)
 COLA tied to CPI
• Employer-Provided Retirement Plans
 Qualified pension plans
 Profit-sharing plans
 Savings Plans

31. Tax Deferral Strategies(3):

32. Tax Deferral Strategies(3):
Like Kind Exchanges
Tax free corporate reorganizations
Equity Collars with monetizing the hedged stock, e.g. puts on hedged
stocks from employee stock options (other examples p. 294)
Exchange Funds

33. Qualified Retirement Plans
A. Pension Plans, Profit Sharing Plans, Savings/Thrift Plans, HR-10
B. Stock bonus plans, Employee Stock Ownership Plans (ESOP), Keogh Plans
C. Nonqualified Annuity
D. A & B only
E. A, B & C

34. Qualified Retirement Plans
A. Pension Plans, Profit Sharing Plans, Savings/Thrift Plans, HR-10
B.
C. Nonqualified Annuity
D. A & B only
E. A, B & C

35. Qualified Retirement Plans
A.
B.
C. Nonqualified Annuity
D. A & B only
E. A, B & C

36. Qualified Retirement Plans
A.
B.
C.
D. A & B only
E. A, B & C

37. Qualified Retirement Plans
A.
B.
C.
D.
E. A, B & C

38. Qualified Retirement Plans
A.
B.
C.
D.
E.

39. Qualified Retirement Plans
A.
B.
C.
D.
E.
Right Answer: Qualified Retirement Plans are spelled out in 401 (k). Correct answer (d) A& B. Pension
Plans, Profit Sharing Plans, Savings/Thrift Plans, Stock bonus plans, Employee Stock Ownership Plans (ESOP),
Keogh Plans

40. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.

41. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio

42. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because

43. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline

44. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce

45. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated

46. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated
4. Support for dependent children may have ended

47. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated
4. Support for dependent children may have ended
5. Senior discounts (Go AARP)

48. Method used to estimate needed retirement income based on a
percentage of expected final average earned income.
Income Replacement Ratio
60-80% because
1. Taxes usually decline
2. Certain work related expenses may end or reduce
3. Home-ownership expenses may decline if mortgage debt is
eliminated
4. Support for dependent children may have ended
5. Senior discounts (Go AARP)
6. General expenses may decline as the aging individual
become less active/more sedentary

49. The parties to an annuity?

50. The parties to an annuity?
Insurer, Contract Owner & Annuitant

51. The parties to an annuity?
Insurer, Contract Owner & Annuitant
•Insurer
•Contract Owner: the party who purchases the annuity from the
insurer and who makes premium payments. May be the annuitant.
•Annuitant: the person insured under the annuity

52. Qualified Retirement Plan

53. Qualified Retirement Plan
A retirement plan that meets the requirements established
by the IRS for favorable tax treatment

54. Traditional IRA

55. Traditional IRA
A retirement savings plan
By which an individual can use tax-deductible
And tax deferred methods
For accumulating wealth.

56. 4 Retirement funding ‘vehicles:’

57. 4 Retirement funding ‘vehicles:’
Tax deductible
Tax Free
Tax deferred
Currently taxable

58. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation

59. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation

60. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation

61. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation

62. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation

63. Match the tax section
Section 1035 Like-Kind
Section 1036 Emp Stock Option Plan
Section 1042 Life to Annuity
Section 351 Corporate Stock Options
Section 1031 Corporation Formation

64. Nonforfeitable right to his/her account balance under a defined-
contribution plan or to an accrued benefit under a defined=benefit
plan that results for employer contributions to the plan

65. Nonforfeitable right to his/her account balance under a defined-
contribution plan or to an accrued benefit under a defined=benefit
plan that results for employer contributions to the plan
Vesting

66. Nonforfeitable right to his/her account balance under a defined-
contribution plan or to an accrued benefit under a defined=benefit
plan that results for employer contributions to the plan
Vesting

68. Qualified Annuity

69. Qualified Annuity
• An annuity that is used as a funding vehicle in a
qualified plan, such as an individual retirement
account, a tax-sheltered annuity, or a 401(k)
plan.
• 10% tax penalty for early withdrawal (age 70.5)

70. A Qualified 401(k) plan meets the IRS rules in
section 401(k) & participants may choose to
TRUE or FALSE?

71. A Qualified 401(k) plan meets the IRS rules in
section 401(k) & participants may choose to
TRUE or FALSE?

72. Highly secure, liquid investment that investors commonly use for the
liquid portion of their investment portfolios

73. Highly secure, liquid investment that investors commonly use for the
liquid portion of their investment portfolios
Money Market Mutual Fund

74. Highly secure, liquid investment that investors commonly use for the
liquid portion of their investment portfolios
Money Market Mutual Fund

75. 2 features & examples for
Money Market Account

76. 2 features & examples for
Money Market Account
Relatively safe
Liquid investment
Such as securities issued or guaranteed by the federal
government, certificates of deposit, banker’s acceptances, euro
dollars, and commercial paper