Help
Course Catalog > Portfolios > 200
Portfolios 210: How to Invest for College

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!

Get a certificate for this quiz
Enter your name and email address below to receive certificate for this course. You will need this to confirm you have completed it.


Review your answers below to learn more.
1.
Emily withdrew $10,000 from her traditional IRA with the intention of using it to pay for her college expenses. But after the withdrawal, she decided to put the money toward a car. Because she originally intended to use the money for college, she won't be charged a penalty.
Choose wisely. There is only one correct answer.
False. The intention does not matter. Only the actual use matters. Therefore, she will be charged a penalty.
2.
Money in a Coverdell education savings account is intended for educational use and cannot legally be used for anything else.
Choose wisely. There is only one correct answer.
True. This is its intended use.
3.
Who administers a Section 529 plan?
Choose wisely. There is only one correct answer.
An investment company. An investment company of the state's choosing administers them.
4.
With a prepaid tuition plan, you can control what the plan invests in.
Choose wisely. There is only one correct answer.
False. The state controls what the plan invests in.
5.
As time draws closer to when your student enters college, your college savings plan for him should probably _______.
Choose wisely. There is only one correct answer.
Shift into less-volatile assets. Normally, as you reach a goal that you have been financing for a long, long time with high-risk investments, the danger of it recovering from a fall is very high. That's why advisors recommend shifting your holdings to safer investments, such as short-term bond mutual funds. Such funds would weather a downturn rather well.
6.
If you withdraw money from your Roth IRA for college expenses, you might still have to pay taxes on them.
Choose wisely. There is only one correct answer.
True. Any earnings that have built up in your account will be taxed. The original contributions in the account will not be taxed, as they were already taxed in the year you put them in.
7.
Withdrawals from an UGMA account are taxed at whose rate?
Choose wisely. There is only one correct answer.
The recipient's. Withdrawals from an UGMA account are taxed at the recipient's rate.
8.
When choosing a college-savings plan, you want _______.
Choose wisely. There is only one correct answer.
Both of the above. The new crop of college-savings plans provide both a variety of return possibilities and tax savings. Evaluate both when choosing a plan.