7.0 Federal Tax Considerations and Retirement Plans

Learning Objectives

1. Identify how premiums, cash values, policy loans, and dividends are taxed in personal life insurance policies.
2. List the key characteristics of a Modified Endowment Contract (MEC).
3. Describe the tax treatment of group insurance premiums and benefit proceeds.
4. Recognize what qualifies as a Section 1035 exchange.
5. Define the exclusion ratio as it applies to annuity payments.
6. Compare qualified and nonqualified retirement plans.
7. Identify the primary requirements established under ERISA.
8. Distinguish between a Traditional IRA and a Roth IRA.
9. List the major types of qualified retirement plans.

Overview

This chapter examines the federal income tax treatment of life insurance policies, annuity contracts, and retirement plans.