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Education Plans Compare (Continued)

How the Different

Table 9.1

Considered part of the parents’ assets unless specifically in student’s name.

Considered part of the student’s assets.

Not considered for financial aid.

Considered part of the student’s assets.

Considered part of the parents’ assets if for a child. But are student’s assets

if education is for oneself.

Savings plans are part of the parents’ assets. Prepaid plans are considered part of the student’s assets.

Affect on financial aid

Owner.

Owner.

Owner.

Owner.

Bonds have guaranteed returns.

State sponsor and program manager.

Investment decisions?

No.

No.

Yes.

Yes.

No.

No.

Income limits?

167

No.

No.

No.

Yes.

Yes.

Yes.

Affects tax credits?

Money can be withdrawn at any time for any purpose.

Money can be withdrawn at any time as long as it’s for the minor’s benefit.

There are no penalties for early withdrawal when used for higher education.

Earnings on non- qualified withdrawals taxed at owner’s rate plus 10% penalty.

May be redeemed as soon as six months after issue. There is a penalty if redeemed in first five years.

Earnings taxed at owner’s rate plus a 10% penalty when funds aren’t used for qualified costs.

Flexibility

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