Once again, the types of changes that would jeopardize favorable
MEC status are unlikely to arise with ordinary level premium whole life policies.
Therefore the owner can only contribute $ 4,000 that year to avoid
MEC status.
Flexible - premium policies must pass the seven - pay test in order to avoid
MEC status.
Face amount decreases within the first seven years of an exchanged may result in
MEC status.
Our church's whole life insurance policy became a MEC and the pastor neglected to alert the board of
the MEC status because he was informed by the agent that 501cs are tax exempt and do not pay taxes on a MEC.
In fact, often the company will not apply the premium and will send it back to you if it will cause
MEC status.
To add more confusion the seven - year MEC premium level can not be paid in a VUL every year for 7 years, and still avoid
MEC status.
In fact, often the company will not apply the premium and will send it back to you if it will cause
MEC status.
I bought a whole life policy over 20 years ago, the policy converted to
MEC status, the insurance agent advertised the product as a tax - deferred saving product with a life insurance component.Could you provide me with any advice on how I can have the
MEC status reversed?
Our church's whole life insurance policy became a MEC and the pastor neglected to alert the board of
the MEC status because he was informed by the agent that 501cs are tax exempt and do not pay taxes on a MEC.
Not exact matches
If you are using paid up additions to increase your cash value you need to be aware that over funding your policy will change the tax
status of your policy to that of a modified endowment contract (
MEC).
The guidelines were established to set limits on the amount of excess premiums a policyholder could contribute to a policy for benefiting from the tax - advantaged
status of proceeds from life insurance and avoid a modified endowment contract (
MEC).
Avoid Modified Endowment
Status: If the subsequent premiums paid into the new policy, other than the exchange proceeds, are within the new 7 - pay limit, then a 1035 Exchange of a life insurance policy allows the policy owner to place the original contract's entire value in the new policy without creating a modified endowment contract, or
MEC.
When a policy becomes a
MEC, the tax
status of death benefit is unaffected and any policy build up continues to grow tax deferred.
If you are using paid up additions to increase your cash value you need to be aware that over funding your policy will change the tax
status of your policy to that of a modified endowment contract (
MEC).
If you have questions regarding your MER and
MEC or want to know the
status of your forms, view your Driver Record using your myBMV account or contact the BMV at 888-692-6841.