What does MEC stand for?

Modified Endowment Contract

This definition appears very rarely and is found in the following Acronym Finder categories:

Business, finance, etc.

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Samples in periodicals archive:

The next best retirement planning strategy is the Modified Endowment Contract or the MEC.

Your Guide to Retirement Planning

Be Aware You can access the money in your policy unless it is a Modified Endowment Contract.

Do You Need Life Insurance

However, the cash values from single premium life policies are treated like tax-deferred annuities, whereby distributions from modified endowment contracts are treated on a last-in, first-out basis.

Don't pass up the tax avantages of life insurance

According to the Technical and Miscellaneous Revenue Act of 1988, a policy with excessive premiums in its first seven years is a modified endowment contract (MEC), which triggers adverse tax consequences.

Exchanging life insurance and annuity contracts

But Congress takes as it gives: It promptly introduced the modified endowment contract rules.

Be a savvy insurance shopper

1) Tax-free income assumes: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract.

Building Your Financial House

A modified endowment contract has nothing to do with amounts payable at the end of the contract or the amounts payable to the beneficiary.

Delving Deeper

The first two requirements must be met to exclude amounts received as death benefits; the third requirement applies only to the taxation of "living" benefits that are modified endowment contracts.

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