Margaret Is Trying to Decide Whether to Place Funds in a Qualified

question 20

Essay

Margaret is trying to decide whether to place funds in a qualified tuition program.Her son will be attending college in 4 years.She is in the 35% marginal tax bracket and she believes she can earn 7% before tax return on alternative investments.Thus,$10,000 will accumulate to $11,948 (after-tax)in 4 years.Margaret expects tuition to increase at the rate of 5% each year to $12,155 in 4 years.Her son will be in the 15% marginal tax bracket in all relevant years.Given these assumptions,should Margaret participate in the qualified tuition program?

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Definitions:

Independent

The state of being self-reliant and not dependent on others for support or decision-making.

Aggressive

Characterized by or exhibiting forceful actions or behaviors, often with the intention to dominate or intimidate others.

Gender Identity

An individual’s perception of himself or herself as masculine or feminine.

Gender Nonconformity

Behaviors or identities that do not match traditional social norms or expectations associated with one's birth-assigned gender.