Education and Other Plans Flashcards
What is the contribution limit of a Coverdell educations avings account (ESA)?
2000 annually
What happens if you withdrawal from an ESA for non educational purposes?
10% fee and ordinary income tax
When must all ESA be spent?
By the time the beneficiary reaches 30
What are two type sof 529 plans?
- Prepaid tuition plans
- college savings plans
What are target date funds in college savings plans and what is their structure?
Funds that are structured around the year the funds are needed and are agressive but then become more conservative
How frequently can someone make changes to their 529 investment allocation?
twice per year
How frequently can 529 move from one state to another?
once a year
How do 529 plans differ from UTMA accounts?
Assets are only property of plan participant not beneficiary
When can beneficiary changes be made without tax consequences in a 529 plan?
Eligible family members
What is the penalt relief if beneficiary receives a scholarship and no longer needs the 529 plan?
010% penalty goes away for removal
What is the main benefit of ABLE accounts?
Way to save money while not risking the loss of other forms of aid
By what age must you be disabled to qualify for ABLE account?
26
What are three tax qualities of ABLE accounts?
- after-tax contributions
- tax-shltered growth
- qualified distributions are tax-free
Which college savings plan poses age restrictions?
Coveredall ESA
Contributions two which plan are subject to gift taxes?
529
Which type of education plan is subject to employment income not allowing contribution?
Coveredall ESA subject to limitations
Are QTPs state or federal?
state
What is the general tax structure of 529 plan?
non-tax deductible contributions and tax-free distributions
By when must all contributions be taken from Coveredall ESA plans?
age 30
Towards what is payment only allowed from 529 plan if it is being used at non-college level?
only tuition
