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d) All assets withdrawn are taxed as normal income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Most states allow the assets to be withdrawn tax-free.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. Who benefits the most from prepaid expenses?

    Learn who benefits most when expenses are prepaid. Individuals and businesses often make payments, such as rent or insurance, ...
  2. 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: ...
  3. 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 ...
  4. Committing acts against the Commodity Exchange Act can result in fines up to ... ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  5. Does working capital include prepaid expenses?

    Discover how prepaid expenses can be classified as short-term assets included in the calculations for determining working ...
  6. You observe the following exchange rates in the following markets ...

    Free info on financial certification exams including study guides, exam questions, and much more!
RELATED TERMS
  1. Prepaid Tuition Program

    One of the two major types of 529 plans. Prepaid tuition plans ...
  2. 529 Prepaid Tuition Plan

    A tax-advantaged method for paying future college tuition costs ...
  3. 529 Plan

    529 is a category of plans that provide tax advantages when saving ...
  4. 529 Savings Plan

    A tax-advantaged method of saving for future college expenses ...
  5. Tuition Insurance

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

    A zero-coupon bond issued by certain states to assist families ...
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center