Free Federal Tax Considerations Practice Questions
Georgia Life exam (series 12-GA-01) — 80 practice questions.
Subtopics: Death benefit tax, MEC, 1035 exchange, Cash value growth, Premium deductibility, Death benefit taxation, Dividends taxation, Modified endowment contract, Traditional IRA, Roth IRA, Qualified plan contributions, Rollover vs transfer, 403b, Transfer-for-value rule, Estate inclusion incidents of ownership, Three-year rule, Section 79 group term, Key person policy taxation, Life policy withdrawal basis recovery, Required minimum distributions, SEP IRA, 1035 exchange life-to-life, 401k salary deferral, Policy loan taxation, Surrender gain, Surrender calculation, Lapse with loan, Dividend interest taxation, Estate inclusion transfer, ILIT, Gift tax exclusion 2026, Estate tax exemption 2026, Marital deduction, MEC 7-pay test, MEC death benefit, MEC loans, MEC permanence, Annuity withdrawal exception, Annuity basis recovery, 1035 annuity to life, 1035 same insured, Traditional IRA limit 2026, IRA catch-up 2026, 401k deferral 2026, Super catch-up, IRA contribution earned income, IRA age limit, IRA deductibility, IRA early withdrawal, IRA penalty exceptions, Roth qualified distribution, Roth RMDs, Roth contributions basis, Indirect rollover, One rollover per year, Mandatory withholding, Inherited IRA 10-year rule, RMD failure penalty, RMD age born 1960, ERISA, Qualified plan requirements, Vesting, DC vesting schedules, Defined benefit plan, Defined contribution plan, Profit-sharing plan, SIMPLE plan eligibility, SIMPLE early withdrawal, SEP contributions, Keogh plan, 457 plan, Qualified plan loans, Employer-owned life insurance, Buy-sell premiums, Group term over 50k, Group premium deduction, Transfer for value exceptions, Life settlement taxation
Read the Federal Tax Considerations study guide
Sample questions & answers
1. Life insurance death benefits paid in a lump sum to a named beneficiary are generally:
Received income-tax-free
Lump-sum death proceeds paid to a named beneficiary are generally received free of federal income tax.
2. A life policy that fails the seven-pay test is classified as a:
Modified endowment contract
A policy failing the seven-pay test becomes a modified endowment contract (MEC), changing the tax treatment of distributions.
3. The tax-free transfer of one life or annuity contract into another qualifying contract is a:
1035 exchange
Section 1035 allows certain like-kind life and annuity contract exchanges without immediate income tax.
4. The cash value growth inside a permanent life policy is generally:
Tax-deferred while it remains in the policy
Inside buildup of cash value grows tax-deferred and is generally not taxed unless withdrawn above the cost basis.
Practice: Federal Tax Considerations
Answer choices are shuffled every time, and every question comes with an explanation.
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
