Sentences with phrase «withdrawals under a life insurance policy»

1 Under current federal tax rules, you generally may take income - tax - free partial withdrawals under a life insurance policy that is not a Modified Endowment Contract (MEC) up to your basis in the contract.

2 Under current federal tax rules, you generally may take income - tax - free partial withdrawals under a life insurance policy that is not a Modified Endowment Contract (MEC) up to your basis in the contract.

Not exact matches

Under current federal tax rules, you generally may take federal income tax - free withdrawals up to your basis (total premiums paid) in the policy or loans from a life insurance policy that is not a Modified Endowment Contract (MEC).

Under these new laws, withdrawals, partial surrenders, loans, or assignments taken from the gains of a life insurance policy that qualifies as a MEC will be taxed as income and can be subject to IRS penalties.

Unlike traditional life insurance policies, taxes on gains are regular income for MEC withdrawals under last - in, first - out (LIFO) accounting.

As long as the policy is not a Modified Endowment Contract (MEC), or subject to a «force - out» for overfunding under IRC Section 7702B — which can be confirmed with the insurance company — withdrawals from a universal life policy are treated as a basis - first return of principal and are not taxable (until all basis has been recovered).

Notably, when it comes to life insurance, the cost basis — or investment in the contract under the rules of IRC Section 72 (e)(6)-- is equal to the total premiums paid for the policy, reduced by any prior principal distributions (which could include prior withdrawals, or the previous receive of non-taxable dividends from a participating life insurance policy).

Under current federal tax rules, you generally may take federal income tax - free withdrawals up to your basis (total premiums paid) in the policy or loans from a life insurance policy that is not a Modified Endowment Contract (MEC).