Page 1 of 400
CA LIFE AND HEALTH INSURANCE EXAM 2 LATEST
VERSIONS (VERSION A AND B) ACTUAL EXAM 250
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A
Section 529 Plans .....ANSWER.....- state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA .....ANSWER.....private retirement plan that taxes income
before it is saved, but which does not tax interest on that income
when funds are used upon retirement
Distributions don't have to start before 70.5
,Page 2 of 400
401(k) plan .....ANSWER.....Elective deferral plan that allows
employee to reduce compensation by a stated percentage on a
tax deductible/ tax differed basis; often the employer matches
the employee contributions
Simplified Employee Pension (SEP) .....ANSWER.....A qualified
plan in which a smaller employer contributes specified amounts
directly into IRA accounts on behalf of eligible employees
403(b) plan .....ANSWER.....An elective deferral plan for
employees of organizations such as school systems, churches, and
hospitals
Keogh Plan .....ANSWER.....Retirement plan for self-employed
individual and their qualified employees
Rollover .....ANSWER.....Tax free withdrawal of cash or other
assets from one retirement program and its reinvestment in
another program. It is not considered income and it is not taxable
until a later withdrawal. Has to be completed in 60 days
,Page 3 of 400
Transfer .....ANSWER.....When amounts of a qualified plan are
transferred to another qualified plan
Employee Retirement Income Security Act (ERISA)
.....ANSWER.....Federal law that increased the responsibility of
pension plan trustees to protect retirees, established certain
rights related to vesting and portability, and created the Pension
Benefit Guarantee Corporation
profit-sharing plan .....ANSWER.....a benefit whereby employees
may share in the profits of the business
Catch-up Contributions .....ANSWER.....-for those aged 50 or
older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA) - established the catch up provisions**
, Page 4 of 400
Rollover time frame .....ANSWER.....60 days
Keogh Plan .....ANSWER.....A federally-approved, tax-deferred
savings program for self-employed people, allowing them to set
money aside for their retirement.
Annuity Period .....ANSWER.....the payout period of an annuity
Flexible Premium Annuity .....ANSWER.....allows the owner to vary
the premium payments
Deferred Annuity .....ANSWER.....An annuity that starts sometime
in the future.
Variable Annuity .....ANSWER.....Annuity that has a varying rate
of return based on the mutual funds in which one has invested
Gramm-Leach-Bliley Act .....ANSWER.....requires financial
institutions to ensure the security and confidentiality of customer
data
CA LIFE AND HEALTH INSURANCE EXAM 2 LATEST
VERSIONS (VERSION A AND B) ACTUAL EXAM 250
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A
Section 529 Plans .....ANSWER.....- state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA .....ANSWER.....private retirement plan that taxes income
before it is saved, but which does not tax interest on that income
when funds are used upon retirement
Distributions don't have to start before 70.5
,Page 2 of 400
401(k) plan .....ANSWER.....Elective deferral plan that allows
employee to reduce compensation by a stated percentage on a
tax deductible/ tax differed basis; often the employer matches
the employee contributions
Simplified Employee Pension (SEP) .....ANSWER.....A qualified
plan in which a smaller employer contributes specified amounts
directly into IRA accounts on behalf of eligible employees
403(b) plan .....ANSWER.....An elective deferral plan for
employees of organizations such as school systems, churches, and
hospitals
Keogh Plan .....ANSWER.....Retirement plan for self-employed
individual and their qualified employees
Rollover .....ANSWER.....Tax free withdrawal of cash or other
assets from one retirement program and its reinvestment in
another program. It is not considered income and it is not taxable
until a later withdrawal. Has to be completed in 60 days
,Page 3 of 400
Transfer .....ANSWER.....When amounts of a qualified plan are
transferred to another qualified plan
Employee Retirement Income Security Act (ERISA)
.....ANSWER.....Federal law that increased the responsibility of
pension plan trustees to protect retirees, established certain
rights related to vesting and portability, and created the Pension
Benefit Guarantee Corporation
profit-sharing plan .....ANSWER.....a benefit whereby employees
may share in the profits of the business
Catch-up Contributions .....ANSWER.....-for those aged 50 or
older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA) - established the catch up provisions**
, Page 4 of 400
Rollover time frame .....ANSWER.....60 days
Keogh Plan .....ANSWER.....A federally-approved, tax-deferred
savings program for self-employed people, allowing them to set
money aside for their retirement.
Annuity Period .....ANSWER.....the payout period of an annuity
Flexible Premium Annuity .....ANSWER.....allows the owner to vary
the premium payments
Deferred Annuity .....ANSWER.....An annuity that starts sometime
in the future.
Variable Annuity .....ANSWER.....Annuity that has a varying rate
of return based on the mutual funds in which one has invested
Gramm-Leach-Bliley Act .....ANSWER.....requires financial
institutions to ensure the security and confidentiality of customer
data
