A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? Individuals are reducing their overall risk, because only part of the money is being put in each investment. Distribution of dividends occurs during the accumulation period. In this case, the investor is taking a lump-sum distribution before reaching age 59- and must pay an additional 10% penalty on the taxable amount. A variable annuity is a type of annuity contract, the value of which can vary based on the performance of an underlying portfolio of sub accounts. Your answer, waiver of premium, was correct!. The payout compared to the initial payout upon annuitization. No, annuities are not FDIC-insured as they are not bank products. 7. D)Any tax due is deferred. A)not suitable In contrast to mutual funds and other investments made with aftertax money, with annuities there are no tax consequences if owners change how their funds are invested. D)I and III. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. D) There is no tax as the withdrawal is considered return of capital. Your email address will not be published. If the customer takes a withdrawal of $10,000, what are the tax consequences? D)separate account may consist of mutual funds. As with all tax-deferred accounts, municipal bonds are not appropriate investments because interest earned on municipals is already tax exempt at the federal level. As the name implies, the investment performance of a variable annuity's portfolio (separate account) can vary, and the investor bears the risk of any potential decline in its value. A)the yield is always higher than mortgage yields. A)Fixed annuity contract with a discussion regarding purchasing power risk This would not align with the couple's criteria for coverage as long as they both live. a life insurance holder dies sooner than expected. The payout compared to last month's payout. This withdrawal flexibility is achieved by adjusting the annuitys value, up or down, to reflect the change in the general level of interest rates from the start of the selected time period to the time of withdrawal. She may choose to receive monthly payments for the rest of her life. B)I and IV. Question #45 of 48Question ID: 606795 A)100% tax free. What Are the Distribution Options for an Inherited Annuity? Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. The # of accumulation units can rise during the accumulation period, 3. "Variable Annuities: What You Should Know," Page 6. Distributions from such an annuity are computed on a LIFO basis with the income taxed first.
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