Reference no: EM133059667
1. The following statements about "529 plans" for funding college educational expenses are true EXCEPT:
A. Withdrawals from 529 plans for qualified educational expenses are tax-free
B. Parents can retain some control over the funds, including ability to change beneficiaries
C. Contributions are not eligible for federal income tax deductionD. Donor can exercise day to day control over investment management
2. Tuition at the Town State University, a 4-year college, is currently $15,000 per year. Inflation rate for tuition is 3% per year and the annual investment return is 6%. The child is 10 years old and will attend the Home State University at age 18. The parents have not saved anything for their child's education. Show your work.
a) What is the estimated total future costs (tuitions for 4 years) at the time the child enters college?
b) What is the current funding shortfall?
c) How much must the parents save at the end of each year if they start to save today?
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