Which of the Following Is Correct Regarding the Federal Income

question 41

Multiple Choice

Which of the following is correct regarding the federal income taxation of annuities that are purchased with after tax dollars?

• A) Tax must be paid annually on the investment income that accrues during the accumulation period.
• B) If funds are withdrawn during the accumulation period, they are taxed as ordinary income.
• C) Payments received during the liquidation phase are partially exempt from taxation.
• D) There is no tax since each payment is considered compensation for a loss (ie., retirement).

---

Definitions:

Increasing In Size

The process where an organism or object grows in dimension and volume.

Increasing In Weight

The process of gaining body weight, which can be due to muscle mass, fat, or fluid increases.

FITT

An acronym for Frequency, Intensity, Time, and Type; a principle used in creating and managing exercise programs to achieve desired fitness outcomes.

Frequency

The rate at which an event or phenomenon occurs over a specific time period, often used in the context of exercise or other routines.