Which of the Following Is Not a Correct Characteristic of a Coverdell

question 95

Multiple Choice

Which of the following is not a correct characteristic of a Coverdell Education Savings Account?

• A)It may be used to fund an elementary or primary school education.
• B)The child will not owe taxes on any withdrawal made to pay for qualified educational expenses.
• C)There is a 10% penalty on early withdrawals before the child reaches age 17.
• D)The amounts deposited in an Education IRA are not tax deductible.

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Definitions:

Market Rate

The current price or interest rate at which securities, commodities, or currencies can be bought or sold in a marketplace.

Contract Rate

The contract rate is the interest rate specified in a contract, especially in lending agreements or bond issuances, dictating the interest payments to be made.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock, representing its worth at issuance.

Serial Bonds

Bonds that are issued at the same time but mature at different intervals, allowing for the gradual repayment of the debt.