529 & Education Savings Plans For Dummies [2 ed.] 9781394160341, 2023932630, 9781394160334, 9781394160358

Table of contents :
Cover
Title Page
Copyright
Introduction
About This Book
Conventions Used in This Book
Foolish Assumptions
How This Book Is Organized
Part 1: Figuring Out the Cost of Education — and How to Pay It
Part 2: Piecing Together Section 529 Plans
Part 3: Uncovering Coverdell Accounts
Part 4: Filling In the Gaps: More Ways to Save for Education
Part 5: The Part of Tens
Icons Used in This Book
Beyond the Book
Where to Go from Here
Part 1: Figuring Out the Cost of Education — and How to Pay It
Chapter 1: Braving the New World of Education Savings
Doing the Numbers
Exploring Section 529 Plans
Checking Out Coverdell Accounts
But Wait! There’s More!
Maximizing Your Savings, Minimizing Your Tax
Chapter 2: Checking Out Education Costs
Dissecting the Total Bill
Looking into the Costs of Various Types of Schools
Going on to Graduate School
Pushing Forward to Professional Studies
Online and Low-residency Learning: The Wave of the Future
Chapter 3: Realizing All Your Resources
Identifying How Parents Can Contribute
Accepting Help from Family
Understanding the Tax on Gifts
Seeking Out Student Sources
Chapter 4: Sharpening Your Savings Techniques
Focusing on the Family Budget
Changing Your Perspective — Watching Your Savings Grow
Dealing with Debt
Saving Throughout the Ages
Part 2: Piecing Together Section 529 Plans
Chapter 5: Laying Down the Basics of Section 529 Plans
Discovering the Parts of 529 Plans
Figuring Out the Qualifying Criteria
Contributing to a 529 Plan
Picking Your Plan
Weighing the 529 plan features
Chapter 6: Applying Section 529 Plans to Your Household
Opening a Plan
Funding a Plan
Managing Your Investments
Taking Qualifying Distributions
What Does Uncle Sam Have to Say?
Chapter 7: Weighing the Pros and Cons of Section 529 Plans
Pondering the Pros of Section 529 Plans
Working Around the 529 Shortcomings
Part 3: Uncovering Coverdell Accounts
Chapter 8: The Changing World of Coverdell Education Savings Accounts
Covering the Basics
Making Account Contributions
Taking Distributions
Transferring Accounts and Changing Account Beneficiaries
Chapter 9: The Mechanics of Coverdells
Getting a Handle on What You Want
Opening a Plan
Devising an Effective Investment Strategy
Selecting Investments and Placing Buy Orders
Paying Into a Coverdell Education Savings Account
Managing Your Account
Making Distributions
Chapter 10: Figuring the Pluses and Minuses of Coverdell Accounts
Knowing the Pluses of Coverdells
Dealing with Coverdell Snags
Part 4: Filling in the Gaps: More Ways to Save for College
Chapter 11: Saving for College with Qualified U.S. Savings Bonds
Choosing Savings Bonds that Work
Determining Who’s Eligible
Buying and Redeeming Savings Bonds
Rating the Usefulness of Saving Bonds for You
Chapter 12: Setting Up Personal Investment Accounts for Yourself and Your Kids
Pondering Personal Investment Accounts
Looking at Your Investment Options
Registering Your Account
Managing Your Personal Investment Account
Chapter 13: Saving for Education in Trust Accounts
Getting the Definitive Word on Trusts
Looking at Types of Trusts and How They Work
Paying Tax on Your Trust
Identifying the Pros and Cons of Trusts in Relation to College Savings
Chapter 14: Saving in Your Retirement Plans: The IRA Dilemma
Using Your Traditional IRA to Cover College Expenses
Tapping into Your Roth IRA for College Savings
Making Early Distributions from Other Retirement Accounts
Rolling Over Retirement Accounts to Obtain Maximum Benefit
Chapter 15: Buying, Selling, or Refinancing Real Estate
Saving for College in Your House
Using Home Equity
Refinancing your house
Turning Your Vacation Home into a Short-Term Rental
Avoiding The Dormitory Experience: Buying A Place for Your Student to Live
Chapter 16: Funding Education Using Whole Life Insurance
Understanding The Difference Between Term, Universal and Whole Life Policies
Using Cash Value in a Whole Life Policy
Borrowing Against Cash Value to Pay Education Costs
Defining What’s Taxable and What’s Not in a Whole Life Policy
Chapter 17: Accessing Scholarships and Awards
Searching for Scholarships, Fellowships, and Grants
Acquiring College Funding in Exchange for Service
Looking at Tax Issues Regarding Scholarships, Fellowships, and Grants
Chapter 18: Turning On the Financial Aid Faucet
Financial Aid 101
Applying for Aid (Yes, the Dreaded FAFSA)
Squeezing Out Every Drop of Available Money
Timing the receipt of taxable and tax-exempt income
Part 5: The Part of Tens
Chapter 19: Ten Musts for Successful Savings
Paying Into Your Savings Plans First and Regularly
Understanding Your Investments
Changing Investments When Necessary
Staying Current on Tax Law Changes
Being Realistic about Investment Returns
Not Counting on Great-Aunt Neela’s Inheritance
Funding Your Account Now — Not Later
Feeding Your Retirement Plan
Asking Questions of the Experts
Learning from Your Mistakes
Chapter 20: Ten Ways to Dodge the Tax Code Minefield
Knowing Who’s Giving and How Much
Being Aware of Your Income and Phaseout Amounts
Keeping Track of Your Contributions
Avoiding the Penalties for Overfunding an Account
Knowing Your Effective Tax Rate
Staying Aware of Tax Laws in Your State
Keeping Track of Your Qualified Education Expenses
Staying Informed about Changes in Current Laws
Being Honest about Your Child’s College Plans
Getting Answers by Asking Questions
Appendix: Section 529 Plans, State by State
Index
About the Author
Connect with Dummies
End User License Agreement
List of Tables
Chapter 2
TABLE 2-1: Sample Yearly Tuition Costs
TABLE 2-2: Sample Yearly Tuition Costs at Private 4-Year Colleges and Universiti...
TABLE 2-3: Sample Yearly Tuition Costs for Medical Schools
TABLE 2-4: Sample Yearly Tuition Costs for Law Schools
TABLE 2-5: Sample Yearly Tuition Costs for Business Schools
TABLE 2-6: Sample Yearly Tuition Costs for Veterinary Schools
TABLE 2-7: Sample Full-Time Undergraduate Tuition for Online And Low-Residency L...
Chapter 4
TABLE 4-1 Truly Wasteful Spending
TABLE 4-2 Systematic Savings (at 1.5% Interest, Compounded Daily)
Chapter 5
TABLE 5-1 Qualified Education Expenses for 529 Plans
Chapter 6
TABLE 6-1 Prepaid Tuition (PT) and Guaranteed Savings (GS) Plans, by State
TABLE 6-2: Figuring Out Taxable Income from a 529 Distribution
Chapter 7
TABLE 7-1: Comparing Saving In a Section 529 Prepaid Tuition Plan with Saving In...
TABLE 7-2: Comparing saving in a Section 529 savings plan with an ordinary inves...
Chapter 8
TABLE 8-1: Worksheet to figure out limited contribution to a Coverdell account f...
Chapter 10
TABLE 10-1 Nathan's Federal Income Tax Situation
TABLE 10-2 Nathan's Federal Income Tax Situation When He Takes Nonqualifying Dis...
Chapter 11
TABLE 11-1: 2021 And 2022 Income Phaseouts for Tax-Free Series EE and Series I S...
Chapter 15
TABLE 15-1 Calculating Net Equity Changes from Home Updates
Chapter 17
TABLE 17-1 Tax Treatment of Scholarship and Fellowship Payments
List of Illustrations
Chapter 6
FIGURE 6-1: Necessary info for automatic fund transfer.
Chapter 9
FIGURE 9-1: Calculating the tax on multiple plan withdrawals.
Chapter 15
FIGURE 15-1: Calculating capital gains on the sale of a house.