Income Intermediate: Deferred Annuities

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
An annuity that makes payments during the lives of more than one individual is called a _______.
Choose wisely. There is only one correct answer.
Joint and survivor annuity. Joint and survivor annuities make payments during the life of the annuitant and a beneficiary, such as a spouse.
2.
An annuity that allows you to shelter some of your current income from taxes is called a _______.
Choose wisely. There is only one correct answer.
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.
A non-qualified annuity can be a good way to avoid all of the following except _______.
Choose wisely. There is only one correct answer.
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!).
4.
The person who receives the benefits of an annuity is the _______.
Choose wisely. There is only one correct answer.
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.
5.
You must pay taxes on investment earnings that build in your annuity account.
Choose wisely. There is only one correct answer.
False. Your earnings in a deferred annuity build on a tax-deferred basis. You pay no tax on them until you receive them as a payout.