Q:
529 plans may do all of the following except:
a) As a prepaid tuition plan, a 529 locks in a current tuition rate at a specific school
b) As a college savings plan, a 529 establishes a savings account to defray the college costs
c) All contributions are made with after tax dollars and are allowed to grow tax deferred
d) All assets withdrawn are taxed as normal income
A:

The correct answer is c

Most states allow the assets to be withdrawn tax-free.

Have a Financial Question?

RELATED FAQS

  1. What options do I have to save for my child's education?

    There are numerous options available to invest savings for a child's education: State-sponsored "529" college savings plans: ...
  2. What are the differences between deferred expenses and prepaid expenses?

    Learn the difference between prepaid expense and deferred expense and how businesses use and record each in standard accounting ...
RELATED TERMS
  1. Tuition Insurance

    A type of insurance that allows families to recoup some or all ...
  2. Baccalaureate Bond

    A zero-coupon bond issued by certain states to assist families ...
  3. Prepaid Insurance

    Payments that are made in advance for insurance services or coverage. ...
  4. Tax Planning

    Logical analysis of a financial situation or plan from a tax ...
  5. Tax-Deferred Savings Plan

    A savings plan or account that is registered with the government ...
  6. Prepaid Finance Charge

    Charges on a loan agreement which are not included as part of ...
Trading Center