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CFP > Education Planning > Flashcards

Education Planning Flashcards

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CFP® flashcards
1
Q

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

A

five

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2
Q

When are withdrawals from a 529 Plan income tax free?

A

When they are used to pay for qualified education expenses

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3
Q

What is the phaseout for a 529 Plan?

A

none

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4
Q

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

A

none

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5
Q

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

A

$2,000 per beneficiary

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6
Q

When must Coverdell assets be distributed?

A

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

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7
Q

What are the income tax benefits of a Coverdell?

A

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

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8
Q

Who may own a Coverdell account?

A

The student or the parent

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9
Q

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

A

Kindergarten through graduate education

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10
Q

Can a Coverdell be rolled into a 529 Plan?

A

yes

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11
Q

What can a Coverdell invest in?

A

Anything an IRA can

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12
Q

Who controls distribution of funds in a 529 Plan?

A

the parent

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13
Q

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

A

yes

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14
Q

Are contributions to a Coverdell account deductible?

A

no

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15
Q

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

A

No, undergraduate only

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16
Q

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

A

4 years

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17
Q

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

A

at least half time

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18
Q

What amounts does the American Opportunity Tax Credit cover?

A

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

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19
Q

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

A

Yes

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20
Q

What amount does the Lifetime Learning Credit cover?

A

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

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21
Q

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

A

No

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22
Q

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

A
  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
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23
Q

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

A

Series EE

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24
Q

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

A

No

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25
Q

What are Crummey Powers?

A

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

26
Q

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

A
  1. IRA - can withdraw without penalty
  2. Roth IRA - can withdraw contributions without penalty
  3. Section 72(t) can be used for most plans
27
Q

What assets are excluded from FAFSA? (4)

A
  1. Retirement accounts
  2. Cash value of life insurance
  3. Home equity
  4. Small business accounts
28
Q

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

A

students - 20-25% of assets

Parents - 5-5.64% of assets

29
Q

Are Pell Grants available for both undergraduate and graduate students?

A

No, undergraduate only

30
Q

What are the enrollment requirements for Pell Grants?

A

May be full or part time

31
Q

What determines who receives Pell Grants?

A

Pell Grants are for those with severe financial need

32
Q

How are Federal Supplemental Educational Opportunity Grants funded and administered?

A

funded by the federal government and administered by the states

33
Q

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

A

No, undergraduate only

34
Q

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

A

May be full or part time

35
Q

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

A

Pell Grant recipients

36
Q

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

A

financial need

37
Q

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.

A

Teacher Education Assistance for College and Higher Education Grant Program

38
Q

Are Perkins Loans available to both undergraduate and graduate students?

A

Yes

39
Q

What determines who receives Perkins Loans?

A

financial need

40
Q

What are the enrollment requirements for Perkins Loans?

A

at least half time

41
Q

Are Stafford Loans available to both undergraduate and graduate students?

A

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

42
Q

Which Stafford Loans are subsidized?

A

Those based on need

43
Q

How does the government subsidize Stafford Loans?

A

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

44
Q

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

A

interest only

45
Q

What are the enrollment requirements for a Stafford Loan?

A

At least half time

46
Q

What is the repayment period for a Perkins Loan?

A

10 years

47
Q

What is the repayment period for a Stafford Loan?

A

10 years

48
Q

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

A

Parent Loans to Undergraduate Students (PLUS)

49
Q

What are the enrollment requirements for PLUS loans?

A

Must be full time

50
Q

Are PLUS loans needs based?

A

No

51
Q

Are PLUS loans available for undergraduate and graduate students?

A

No, undergraduate only

52
Q

What is the limit on PLUS loans?

A

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

53
Q

When is repayment on PLUS loans required?

A

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

54
Q

Are TEACH grants available to both undergraduate and graduate students?

A

Yes, and professional students as well

55
Q

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

A

College Work Study

56
Q

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

A

Yes

57
Q

What are the enrollment requirements for College Work Study?

A

Part time or full time

58
Q

Can College Work Study jobs be off campus?

A

yes

59
Q

Are contributions to a Section 529 plan deductible?

A

No

60
Q

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

A

yes

CFP (9 decks)

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