Education Planning

Question 1

Contributions made in one year to a 529 Plan can be taxed as if they were made over ___ years for gift tax purposes.

Answer 1

five

Question 2

When are withdrawals from a 529 Plan income tax free?

Answer 2

When they are used to pay for qualified education expenses

Question 3

What is the phaseout for a 529 Plan?

Answer 3

none

Question 4

What is the age limit on use of a 529 Plan?

Answer 4

none

Question 5

What is the annual limit that can be put into a Coverdell Education Savings Account?

Answer 5

$2,000 per beneficiary

Question 6

When must Coverdell assets be distributed?

Answer 6

Within 30 days of the beneficiary reaching 30 or passes away (whichever is earlier)

Question 7

What are the income tax benefits of a Coverdell?

Answer 7

income taxes are deferred on growth and withdrawals for qualified educational expenses are not taxable

Question 8

Who may own a Coverdell account?

Answer 8

The student or the parent

Question 9

What levels of education can a Coverdell account be used for?

Answer 9

Kindergarten through graduate education

Question 10

Can a Coverdell be rolled into a 529 Plan?

Answer 10

yes

Question 11

What can a Coverdell invest in?

Answer 11

Anything an IRA can

Question 12

Who controls distribution of funds in a 529 Plan?

Answer 12

the parent

Question 13

Can a contribution be made to a 529 Plan and a Coverdell account in the same year for the same beneficiary?

Answer 13

yes

Question 14

Are contributions to a Coverdell account deductible?

Answer 14

no

Question 15

Is the Amertican Opportunity Tax Credit available to both undergraduate and graduate students?

Answer 15

No, undergraduate only

Question 16

For how many years is the American Opportunity Tax Credit available?

Answer 16

4 years

Question 17

What are the enrollment requirements for the American Opportunity Tax Credit?

Answer 17

at least half time

Question 18

What amounts does the American Opportunity Tax Credit cover?

Answer 18

100% of the first $2,000 of qualified education expenses and 25% of the next $2,000

Question 19

Is the Lifetime Learning Credit available to both undergraduate and graduate students?

Answer 19

Yes

Question 20

What amount does the Lifetime Learning Credit cover?

Answer 20

20% of qualified education expenses up to $10,000

Question 21

Can the American Opportunity Tax Credit and the Lifetime Learning Credit be claimed for the same student in the same year?

Answer 21

No

Question 22

What are the qualifications to exclude all or a portion of the interest from Series EE and I savings bonds? (3)

Answer 22

1. Bondholder must be at least 24 years old when the bond is purchased
2. The taxpayer, spouse, or dependent must incur tuition or other educational expenses
3. Income must be below certain thresholds

Question 23

Which savings bonds can be converted tax-free to Section 529 Plans?

Answer 23

Series EE

Question 24

Does a current income (Section 2403(b)) trust avoid the kiddie tax?

Answer 24

No

Question 25

What are Crummey Powers?

Answer 25

permit the beneficiary to withdraw the lesser of the annual addition to a trust or the annual gift tax exclusion

Question 26

Which retirement plans allow withdrawals for higher education? (3)

Answer 26

1. IRA - can withdraw without penalty 2. Roth IRA - can withdraw contributions without penalty 3. Section 72(t) can be used for most plans

Question 27

What assets are excluded from FAFSA? (4)

Answer 27

1. Retirement accounts 2. Cash value of life insurance 3. Home equity 4. Small business accounts

Question 28

What is the expected contribution for students and parents on FAFSA?

Answer 28

students - 20-25% of assets | Parents - 5-5.64% of assets

Question 29

Are Pell Grants available for both undergraduate and graduate students?

Answer 29

No, undergraduate only

Question 30

What are the enrollment requirements for Pell Grants?

Answer 30

May be full or part time

Question 31

What determines who receives Pell Grants?

Answer 31

Pell Grants are for those with severe financial need

Question 32

How are Federal Supplemental Educational Opportunity Grants funded and administered?

Answer 32

funded by the federal government and administered by the states

Question 33

Are Federal Supplemental Educational Opportunity Grants available for both undergraduate and graduate students?

Answer 33

No, undergraduate only

Question 34

What are the enrollment requirements for Federal Supplemental Educational Opportunity Grants?

Answer 34

May be full or part time

Question 35

Who receives the highest priority for Federal Supplemental Educational Opportunity Grants?

Answer 35

Pell Grant recipients

Question 36

What are awards of Federal Supplemental Educational Opportunity Grants based on?

Answer 36

financial need

Question 37

This grants provides up to $4,000 to students who agree to serve as full-time teachers in a high-need field in a public or private elementary or secondary school that serves low income students.

Answer 37

Teacher Education Assistance for College and Higher Education Grant Program

Question 38

Are Perkins Loans available to both undergraduate and graduate students?

Answer 38

Yes

Question 39

What determines who receives Perkins Loans?

Answer 39

financial need

Question 40

What are the enrollment requirements for Perkins Loans?

Answer 40

at least half time

Question 41

Are Stafford Loans available to both undergraduate and graduate students?

Answer 41

Subsidized Stafford loans are only available to undergraduate students. Unsubsidized are available to both undergraduate and graduate students.

Question 42

Which Stafford Loans are subsidized?

Answer 42

Those based on need

Question 43

How does the government subsidize Stafford Loans?

Answer 43

The government pays interest while the student is in school and six months following graduation

Question 44

What must a student pay on an unsubsidized Stafford Loan while still in school?

Answer 44

interest only

Question 45

What are the enrollment requirements for a Stafford Loan?

Answer 45

At least half time

Question 46

What is the repayment period for a Perkins Loan?

Answer 46

10 years

Question 47

What is the repayment period for a Stafford Loan?

Answer 47

10 years

Question 48

These loans allow parents to borrow for their children's studies?

Answer 48

Parent Loans to Undergraduate Students (PLUS)

Question 49

What are the enrollment requirements for PLUS loans?

Answer 49

Must be full time

Question 50

Are PLUS loans needs based?

Answer 50

No

Question 51

Are PLUS loans available for undergraduate and graduate students?

Answer 51

No, undergraduate only

Question 52

What is the limit on PLUS loans?

Answer 52

There is no limit, though it cannot exceed the cost of schooling

Question 53

When is repayment on PLUS loans required?

Answer 53

Once the student is out of school. Interest will accrue while they are in school.

Question 54

Are TEACH grants available to both undergraduate and graduate students?

Answer 54

Yes, and professional students as well

Question 55

Eligible students are provided employment to help cover the costs of their education.

Answer 55

College Work Study

Question 56

Is College Work Study available to both undergrate and graduate students?

Answer 56

Yes

Question 57

What are the enrollment requirements for College Work Study?

Answer 57

Part time or full time

Question 58

Can College Work Study jobs be off campus?

Answer 58

yes

Question 59

Are contributions to a Section 529 plan deductible?

Answer 59

No

Question 60

Can a Seciton 529 Plan be used for elementary and secondary education?

Answer 60

yes