AWMA Test Questions with All Correct Answers

AWMA Test Questions with All Correct Answers Corporations receive a partial exemption for income tax purposes - Answer-Dividend income from investments in other companies (70,80,100% tiers) profit-sharing plan - Answer-incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary. Employer contributes 0-25% of covered payroll, individual may not exceed lesser of 100% of company or $66k. (Defined contribution plan) SIMPLE - Answer-For 100 or less employees. Retirement plan allows for elective contributions from employer + employee max of $15.5k (each). Age 50+ additional $3k catchup allowed. 2 year rollover holding period required Liability Umbrella - Answer-umbrella policies (both personal and commercial) are purchased to provide excess liability coverage to an insured party. Private placement life insurance - Answer-individually tailored variable life insurance policies not subject to SEC registration requirements and designed specifically for and available only to certain qualified investors. To purchase, the individual must qualify as accredited investors or qualified purchases. Modified Endowment Contract (MEC) - Answer-A life insurance policy under which the amount a policy owner pays in during the first 7 years exceeds the sum of net level premiums that would have been payable to provide paid-up future benefits. Once classified as such it cannot be undone and any withdrawals from policy may be subject to a 10% early withdrawal penalty