Zeta Corporation is using life insurance to provide a $200,000 death benefit to the beneficiary or estate of T. A. Gordon, a key executive. Zeta Corp. expects to be in a 34% tax bracket when the benefit is paid, so a $132,000 policy has been purchased on Gordon’s life. Zeta Corp. is the owner and beneficiary of the policy and pays the premiums. When Gordon dies, which of the following is true?

Fiduciaries cannot delegate fiduciary responsibilities and, in turn, avoid direct responsibility for performing the duty.

Bill Brown, age 51, is planning to retire in 5 years and withdraw funds from his tax deferred annuity. Bill can make this withdrawal, but he must pay a 10% penalty for early withdrawal.

The IRS has limited corporate deductions for payments under golden parachute arrangements; however, these limits do not apply to a closely held corporation.

Which of the following is (are) true regarding retroactive amendments?

George Flint was transferred to Chicago three years ago. When he left Detroit, he sold his home and put some of the money in a new Roth IRA. He and his wife, Wilma, have been renting a home for the past 3 years. Recently, the homeowner decided to sell. George is interested in buying the home. George can make a penalty-free withdrawal from his Roth IRA to help complete the purchase.

An incentive stock option plan is an alternative to a bonus plan.

Which of the following is (are) true?

The owners of MegaStat Corporation have asked for your help in designing a health benefit program for retirees. The owners tell you that they need a plan that has a low initial cash flow, is simple to implement, and has no nondiscrimination requirements to meet. You recommend

Reed Collier works for Database Administration, Inc. He has an informally funded nonqualified deferred compensation plan. Database Administration, Inc. can use life insurance to fund this plan.