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1.
If you withdraw money from your Roth IRA for college expenses, you might still have to pay taxes on them.
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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.
2.
When it comes to using a traditional IRA to pay for college expenses, acceptable uses include _______.
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All of the above. For room and board, however, students must be enrolled at least part-time.
3.
What kinds of investments can you transfer to an UGMA account?
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All of the above. You are allowed to transfer any of these to an UGMA account.
4.
Prepaid tuition plans let you lock in the cost of college at _______.
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Today's prices. One of the chief attractions of prepaid tuition plans is how they lock in college costs at current prices.
5.
Assuming they are used for qualified educational purposes, withdrawals from a Coverdell education savings account are _______.
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Tax-free. Contributions are taxable, but qualified withdrawals are tax-free.
6.
How much can you contribute to a Section 529 plan?
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The amount varies according to the plan. Each plan is different. Some have very high limits.
7.
Which of the following will a financial aid office consider most important?
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Your income. Financial aid offices consider this the most important of all these options.
8.
As time draws closer to when your student enters college, your college savings plan for him should probably _______.
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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.