Saving for College 529s and Coverdells Flashcards
In a 529 plan, can a beneficiary even be a non-family member?
Yes, but transferring from a family member to a non-family member could trigger a taxable event
In either of the ESAs, is the SSN for the beneficiary needed at the time the app is taken?
Yes
In either ESA, with a joint bank account, is a signature guarantee needed?
For American Funds, the answer is no.
What are the tax implications on withdrawals from a Non-Qualified UGMA?
Check with a qualified tax professional for specific information since we do not provide tax advice, but otherwise there are no tax implications on withdrawals from UGMAs
Does California offer any state tax benefits on any of the ESAs?
Check with a qualified tax professional for specific information since we do not provide tax advice, but otherwise no not on contributions, earnings or withdrawals.
In a 529 plan, how often can the owner make changes to the investment portfolio?
The owner is able to change assets among funds once per year or anytime the change the beneficiary
What are the contribution limits for UGMA/UTMAs?
There are no limits to contributions made to UGMA/UTMAs
What are the tax implications on earnings in a 529 plan?
Check with a qualified tax professional for specific information since we do not provide tax advice, but otherwise earnings grow tax-free
What are the tax implications on earnings in a Coverdell?
Check with a qualified tax professional for specific information since we do not provide tax advice, but otherwise earnings grow tax free
What are the tax implications on non-qualified withdrawals from 529 plans and Coverdells?
Check with a qualified tax professional for specific information since we do not provide tax advice, but otherwise non-qualified withdrawals will be subject to ordinary income and a 10% penalty
What are the federal tax implications on qualified withdrawals from a 529 plan?
Check with a qualified tax professional for specific information since we do not provide tax advice, but otherwise withdrawals used for qualified higher education expenses are free from federal tax
What are the federal tax implications on earnings in a UGMA?
For children under 19, the first $950 of earnings are tax free; from $951-$1900 earnings are taxed at the child’s rate; earnings above $1901 are taxed at the parent’s rate. For children over 19, all earnings are taxed at the child’s rate.
How often can the owner of a UGMA make changes to the investment portfolio?
Anytime but each change is usually a taxable event
Are clients able to rollover a Coverdell from one fund company to another and if so are there any limits?
Yes, once every 12 months
Are clients able to rollover a UGMA from on fund company to another and if so are there any limits?
Rollovers with UGMAs are not allowed
In a 529 plan, who has authority over the account?
The account owner for the entire life of the account unless they transfer ownership;
Which ESA does not allow any beneficiary changes?
UGMAs
In a Coverdell, who has authority over the account?
The account owner until the beneficiary reaches 18 years old, then they can take control
In a UGMA, who has authority over the account?
The account owner until the beneficiary reaches 18 years old, then they can take control
What uses are considered qualified expenses with Coverdells?
Tuition, Room & Board, books, fees for Kindergarten thru Grad School
Do 529 plans impose any income limits on the account owners?
No, there are no limits to incomes
What uses are considered qualified expenses with 529 plans?
Tuition, Room & Board, books, fees for JCs, Undergrad, Grad, Professional and Technical training
Are clients able to rollover a 529 plan from one fund company to another and if so are there any limits?
Yes, once every 12 months or due to a beneficiary change
Are there any contribution limits to a 529 plan?
Yes, $350,000 total account value per beneficiary. And, $14,000/$28,000 annually(single/joint) excepting gift tax exclusions over a 5 year period limits are $70,000/$140,000 annually(single/joint)
