PFS Student Learning & Development 2

Question 1

A parent wants to transfer a 529 plan balance to a different beneficiary without penalty. Which relationship between the old and new beneficiary qualifies?

Accepted Answer

Family member

Answer

529 plan rollovers to a different beneficiary are penalty-free only if the new beneficiary is a family member of the original beneficiary.

Question 2

Which federal loan type requires the borrower to demonstrate financial need and does NOT accrue interest while the student is enrolled at least half-time?

Accepted Answer

Subsidized Direct Loan

Answer

Subsidized Direct Loans are need-based and the federal government pays interest during in-school, grace, and deferment periods.

Question 3

A student received a $3,000 scholarship that covers tuition and fees. How is the scholarship treated for federal income tax purposes?

Accepted Answer

Excluded from gross income entirely

Answer

Scholarship amounts used for qualified tuition and required fees are excluded from gross income under IRC §117.

Question 4

What is the maximum annual contribution limit to a Coverdell Education Savings Account (ESA) per beneficiary?

Accepted Answer

$2,000

Answer

The annual contribution limit for a Coverdell ESA is $2,000 per beneficiary, regardless of how many accounts exist.

Question 5

Under the American Opportunity Tax Credit (AOTC), what is the maximum credit available per eligible student per year?

Accepted Answer

$2,500

Answer

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

(PFS) Personal Financial Specialist Practice Test

(PFS) Personal Financial Specialist Practice Test

PFS Student Learning & Development 2