Earnings in
the account grow tax-free until withdrawn. Withdrawals
are tax-free if they do not exceed the beneficiary's qualified
education expenses for the tax year.
Earnings in
the account grow tax free. Withdrawals are tax free as
long as the money is used for higher education.
Earnings in
the account grow tax free. Withdrawals are tax free as
long as the money is used for higher education.
Financial-aid impact
These investments
are treated as parental assets and reduce your child's
eligibility for federal student aid by a maximum 5.64
percent of their value at the time of application.
A prepaid
tuition plan is considered a resource of the parent if
the parent owns the account. This was clarified by a 2004
ruling from the Department of Education.
Money in a
529 plan is considered a parent's asset, and financial-aid
officers expect parents to contribute 5.6 percent of the
money toward college expenses each year.
Can account be rolled
over?
Yes. Any amount
can be withdrawn and rolled over into a Coverdell account
for another family member. There are no tax consequences
as long as the new beneficiary is under the age of 30.
Money in the
account may be transferred tax free to the prepaid tuition
plan of a family member.
Money in the
account may be transferred tax free to the 529 plan of
a family member.
