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1.
An annuity's exclusion ratio keeps your contributions from being taxed twice.
True. The exclusion ratio determines what part of your annual payments is made up of earnings (which are taxed) and what part is your basis (the money you contributed to your annuity, which was already taxed).
2.
An annuity that allows you to shelter some of your current income from taxes is called a _______.
Qualified annuity. A qualified annuity, based on the assets of a qualified retirement plan such as a 401(k) or 403(b), allows you to shelter some of your current income from taxes.
3.
The person who receives the benefits of an annuity is the _______.
Annuitant. While the annuitant and the owner may be the same person, and some kinds of annuities make payments to other beneficiaries, "annuitant" refers to the primary individual who receives the benefits of an annuity.
4.
A non-qualified annuity can be a good way to avoid all of the following except _______.
Early withdrawal penalties. Unlike the other choices, early withdrawal penalties can't be avoided with deferred annuities (except, of course, by not withdrawing your funds prematurely!).
5.
All of the following are benefits of deferred annuities except _______.
Easy access to capital. Easy access to capital is not a benefit of deferred annuities, where surrender fees and tax penalties can affect early withdrawals.