Question 4018 of 287 · Texas Life, Accident and Health Agent Exam
Which of these is a Modified Endowment Contract rule for withdrawals and loans?
Exactly one answer is correct.
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Correct answer to question 4018
- A: They are taxed on a last in, first out basis, with a 10 percent penalty if taken before age 59 and a half
Explanation
For a MEC, gains come out first, so the distribution is taxable up to the gain. A penalty applies to the taxable amount received before 59 and a half.
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