PFS Student Learning & Development 3

Question 1

Which of the following expenses is NOT a qualified expense for 529 plan distributions used for K-12 education?

Accepted Answer

Room and board for K-12

Answer

For K-12 purposes, 529 qualified expenses are limited to $10,000 per year in tuition only; room and board is not included.

Question 2

An employer provides $6,000 in annual educational assistance benefits under a §127 plan. How much is excludable from the employee's gross income?

Accepted Answer

$5,250

Answer

Under IRC §127, up to $5,250 per year in employer-provided educational assistance may be excluded from an employee's gross income.

Question 3

Which FAFSA data is used to calculate the Student Aid Index (SAI) for dependent students?

Accepted Answer

Both student and parent income and assets

Answer

The SAI for dependent students is based on both the student's and parents' income and assets reported on the FAFSA.

Question 4

A grandparent-owned 529 plan distribution was previously required to be reported on the student's FAFSA as untaxed income. Under FAFSA Simplification Act changes effective 2024-25, how is this treated?

Accepted Answer

No longer reported on FAFSA at all

Answer

The FAFSA Simplification Act eliminated the question about cash support, so grandparent 529 distributions no longer reduce a student's aid eligibility.

Question 5

What is the income phase-out range for single filers claiming the Lifetime Learning Credit (LLC) in 2024?

Accepted Answer

$80,000–$90,000

Answer

For 2024, the LLC phases out for single filers with MAGI between $80,000 and $90,000.

(PFS) Personal Financial Specialist Practice Test

(PFS) Personal Financial Specialist Practice Test

PFS Student Learning & Development 3