shempmcgurk[at]netscape.net (Shemp McGurk), you asked:

<< <i> 1)Is my understanding correct that if someone owns a pre-TAMRA bought
one-pay life insurance policy that if they withdraw money from the
policy today in 2004 that the funds are considered to come out of the
cost-basis first and there is no tax to pay?</i> >
Yes, this is my understanding as well (I assume pre-TAMRA meaning before Jun
21, 1988).

<< <i> 2) If the answer to #1 is "yes", is it also correct that once
withdrawals have fully exhausted the cost basis that further
withdrawals over and above the cost basis WILL be taxed?</i> >
Yes, that would be correct.

<< <i> Or is it the case that even withdrawals from the tax-deferred portion
will come out tax-free?</i> >
The only way to not pay tax on amounts beyond the basis would be to then switch
to policy loans.

<< <i> 3) if someone wants to 1035 a pre-TAMRA one-pay life policy into a new
one-pay policy today that the pre-TAMRA rules will NOT also be transferred...or
will they?</i> >
It's my understanding that ALL Single Premium Whole Life policies issued after
June 21, 1988 are MEC (Modified Endowment Contract) policies. I don't have a
definitive answer, but would suggest that the grandfathering benefits allowed
on the on SPWL's are not transferable.

If you're actually contemplating this, it would be a VERY good idea to get an
expert tax accountant or tax attorney to advise you.

...

"Shemp McGurk" <shempmcgurk[at]netscape.net> wrote in message
news:a2578468.0402081156.c1184f7[at]posting.google.com
Questions:

1)Is my understanding correct that if someone owns a pre-TAMRA bought
one-pay life insurance policy that if they withdraw money from the
policy today in 2004 that the funds are considered to come out of the
cost-basis first and there is no tax to pay?


I do believe that that IS correct.

2) If the answer to #1 is "yes", is it also correct that once
withdrawals have fully exhausted the cost basis that further
withdrawals over and above the cost basis WILL be taxed? Or is it the
case that even withdrawals from the tax-deferred portion will come out
tax-free?


Anything above the cost basis is generaly taxable income

3) if someone wants to 1035 a pre-TAMRA one-pay life policy into a new
one-pay policy today that the pre-TAMRA rules will NOT also be
transferred...or will they?

I thank you in advance to the answers to these questions...


now you are taxing my memory. AS best I can recollect
(and it has been a few years since I discussed this)
a number of companies were permitting such a rollover.
However, I must suggest that you discuss this with a
"practicing" CPA prior to such a move.

Cal Lester CLU

Questions:

1)Is my understanding correct that if someone owns a pre-TAMRA bought
one-pay life insurance policy that if they withdraw money from the
policy today in 2004 that the funds are considered to come out of the
cost-basis first and there is no tax to pay?

2) If the answer to #1 is "yes", is it also correct that once
withdrawals have fully exhausted the cost basis that further
withdrawals over and above the cost basis WILL be taxed? Or is it the
case that even withdrawals from the tax-deferred portion will come out
tax-free?

3) if someone wants to 1035 a pre-TAMRA one-pay life policy into a new
one-pay policy today that the pre-TAMRA rules will NOT also be
transferred...or will they?

I thank you in advance to the answers to these questions...