What Is a Disadvantage of the "Prepaid College Tuition Plan

question 139

Multiple Choice

What is a disadvantage of the "Prepaid College Tuition Plan" version of the 529 plan?

• A)Distributions before age 59 1/2 incur a 10% tax penalty.
• B)They generally guarantee that your child will be covered only if he or she attends a public in-state university or college.
• C)They allow greater flexibility than the College Savings Plans.
• D)All of the above.
• E)None of the above.

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Definitions:

Credit Period

The duration of time a buyer has to pay a supplier for purchases without incurring interest or penalties.

Perishable

A perishable item is one that has a limited lifespan and can deteriorate or expire, often food, flowers, or medicine.

Buyer's Inventory

The stock of goods a purchaser has on hand, which represents a current asset on the balance sheet that is intended for resale or use in production.

Credit Terms

The conditions, including payment timing and interest, under which credit will be extended to a borrower.