#1
Which type of college savings plan allows for tax-free growth and withdrawals for qualified education expenses?
529 plan
Roth IRA
Coverdell ESA
UTMA/UGMA account
#2
What is the main advantage of a prepaid tuition plan?
Tax-free growth
Flexibility in school choice
Locking in tuition rates
Higher potential returns
#3
Which of the following is NOT a type of college savings plan?
529 plan
IRA
Coverdell ESA
UTMA/UGMA account
#4
What is the maximum contribution limit for a 529 college savings plan (as of 2024)?
$10,000 per year
$15,000 per year
$25,000 per year
There is no maximum limit
#5
What is the primary purpose of a Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) account?
To save for retirement
To transfer assets to a minor
To pay for medical expenses
To invest in stocks and bonds
#6
Which of the following is NOT a benefit of using a 529 plan to save for college?
Tax-deferred growth
Potential state tax deductions
Limited investment options
High contribution limits
#7
Which of the following accounts is specifically designed to cover K-12 education expenses?
529 plan
Coverdell ESA
Roth IRA
UTMA/UGMA account
#8
What is NOT a qualified education expense for a 529 college savings plan?
Tuition and fees
Room and board
Textbooks
Vacation expenses
#9
Which financial aid option is based on financial need and does not need to be repaid?
Scholarships
Grants
Loans
Work-study programs
#10
Which of the following statements about Coverdell Education Savings Accounts (ESAs) is true?
Contributions are tax-deductible
Withdrawals are not taxed if used for qualified education expenses
There are no income limits for contributors
The beneficiary must be under 21 to receive distributions
#11
What happens to the funds in a 529 plan if the intended beneficiary decides not to attend college?
The funds are transferred to another family member's 529 plan
The funds are returned to the account owner with no penalty
The funds must be used for non-education expenses with a penalty
The funds are forfeited
#12
What is the penalty for withdrawing funds from a Coverdell ESA for non-qualified expenses?
10% penalty on earnings plus income tax
No penalty, but subject to income tax
20% penalty on contributions
5% penalty on earnings plus income tax
#13
Which of the following is NOT considered a qualified education expense for a Coverdell ESA?
Tuition and fees
Room and board
Textbooks
Student loan interest
#14
What is the main difference between a prepaid tuition plan and a college savings plan?
Tax treatment
Investment options
Beneficiary age restrictions
Timing of contributions
#15
What is the penalty for withdrawing funds from a 529 plan for non-qualified expenses?
10% penalty on earnings plus income tax
No penalty, but subject to income tax
20% penalty on contributions
5% penalty on earnings plus income tax
#16
Which type of financial aid requires the completion of the FAFSA form?
Scholarships
Grants
Loans
Work-study programs
#17
What is the main advantage of a Roth IRA for college savings?
Tax-deductible contributions
Tax-free withdrawals for qualified education expenses
Penalty-free withdrawals for any purpose
High contribution limits
#18
What is the penalty for withdrawing funds from a traditional IRA for non-qualified education expenses?
10% penalty on earnings plus income tax
No penalty, but subject to income tax
20% penalty on contributions
5% penalty on earnings plus income tax
#19
Which of the following is NOT a qualified education expense for a 529 plan?
Tuition and fees
Room and board
Textbooks
Transportation expenses