General Principles Ch 6

Question 1

Prepaid tuition plans are generally counted as _______ assets to qualify for financial aid.

Answer 1

Parental

Question 2

Under the Tax Cuts and Jobs Act (TCJA), federal tax-free withdrawals will be available from 529 plans for tuition in kindergarten through 12th grade up to ________ per year

Answer 2

$10,000

Question 3

Under the SECURE Act, 529 plans may allow distributions to pay for student loans up to a lifetime limit of _______.

Answer 3

$10,000

Question 4

The maximum amount that can be contributed to a Coverdell ESA, on behalf of an individual child from all sources combined, cannot exceed _______ in a given tax year.

Answer 4

$2,000

Question 5

For financial aid purposes, qualified, education, benefits, including 529’s, and Coverdale ESAs, are treated as ________ assets.

Answer 5

Parental

Question 6

Since 529 plan distributions from non-parent sources can be considered assets of the child and affect financial aid, it is recommended to use the non-parent 529 monies in the _________ years of college, so as not to affect the FAFSA/aid calculation.

Answer 6

Junior/senior

Question 7

________ qualified elementary expenses include elementary religious school room and board, uniforms when required, to and from school, transportation, extended daycare programs.

Answer 7

Coverdell.

Question 8

Regarding ESAs, account gains are _________ if the funds are used for qualified education expenses.

Answer 8

Tax-free

Question 9

Regarding ESAs, contributions are considered to be a gift of _______ interest.

Answer 9

Present

Question 10

Regarding ESAs, the custodian ________ prevent the beneficiary from taking a distribution, even if it is not to be used for qualified education expenses.

Answer 10

Cannot

Question 11

Regarding ESAs, the funds must be distributed by the time the beneficiary reaches age ______ or rolled to a new beneficiary.

Answer 11

30

Question 12

UTMA or UGMA?

Cash type investments plus real estate or limited partnerships

Answer 12

UTMA

Question 13

UTMA or UGMA?

Cash type investments, such as EE bonds, stocks, mutual funds, CDs, savings, accounts, etc.

Answer 13

UGMA

Question 14

True or false?

UGMA and UTMA accounts are not subject to the kiddie tax.

Answer 14

FALSE.

Question 15

True or false: EE education bonds can be owned by a UTMA.

Answer 15

False. EE education bonds cannot be owned by a UTMA.

Question 16

EE education bonds must be owned by _________.

Answer 16

An adult over age 24.

Question 17

A gift to a qualified tuition program is considered a gift of a _______ interest. 

Answer 17

Present

Question 18

A gift to a UTMA is considered a gift of a _________ interest.

Answer 18

Present

Question 19

The owner of a QTP ________ the right to determine how and when to use the money in the account.

Answer 19

Retains

Question 20

The custodian of a UTMA _______ control, when the student reaches the age of majority.

Answer 20

Loses

Question 21

The owner of a qualified tuition program _______ change the beneficiary.

Answer 21

Can

Question 22

The custodian of a UTMA ______ change the beneficiary

Answer 22

Cannot

Question 23

QTP or UTMA:

Grows tax deferred and distributions are tax free if used for qualified educational expenses

Answer 23

Qualified tuition program

Question 24

QTP or UTMA:

Growth and income distribution can be subject to both regular tax and kiddie tax.

Answer 24

UTMA

Question 25

True or false:

Regarding Coverdell ESAs, expenses such as tuition can qualify, even when they are for graduate school, up to age 30.