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Education Planning Flashcards

7 cards from real FPQP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Education Planning flashcards as text

  1. Which of the following accounts offers a tax-free growth and tax-free withdrawal benefit specifically for qualified education expenses?

    Answer: 529 Plan

    529 plans provide tax-free growth and tax-free withdrawals when funds are used for qualified education expenses.

  2. A Coverdell Education Savings Account (ESA) allows annual contributions up to:

    Answer: $2,000 per beneficiary

    The annual contribution limit for a Coverdell ESA is $2,000 per beneficiary from all contributors combined.

  3. Which of the following is NOT a qualified education expense for a 529 plan?

    Answer: Transportation to campus

    Transportation costs are not considered a qualified education expense under 529 plan rules; tuition, fees, room/board, and required books are.

  4. The American Opportunity Tax Credit (AOTC) provides a maximum annual credit of:

    Answer: $2,500

    The AOTC provides a maximum annual credit of $2,500 per eligible student for the first four years of post-secondary education.

  5. Under the SECURE 2.0 Act, unused 529 plan funds can be rolled over to which type of account after 15 years?

    Answer: Roth IRA

    SECURE 2.0 allows rollovers of unused 529 funds to the beneficiary's Roth IRA after the account has been open for 15 years, subject to annual Roth contribution limits.

  6. The Lifetime Learning Credit (LLC) differs from the AOTC in that the LLC:

    Answer: Is available for an unlimited number of years

    Unlike the AOTC which is limited to four tax years per student, the Lifetime Learning Credit can be claimed for an unlimited number of years.

  7. Which financial aid form is required for federal student aid eligibility?

    Answer: FAFSA

    The Free Application for Federal Student Aid (FAFSA) is the required form for determining eligibility for federal grants, loans, and work-study programs.

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