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1. Payment of a student's tuition at an
accredited university by another individual is not a taxable gift if
made directly to the university.
2. Payments to a child for room and board
expenses may qualify for the annual $10,000 annual gift tax exclusion.
3. Under the 2001 Act, a taxpayer may deduct a
limited amount of a child's qualified education expenses
irrespective of the taxpayer's gross income.
4. Early distributions from an IRA to pay for a
grandchild's tuition are subject to the early distribution penalty
assessed under IRC §72.
5. Taxable income of a CUTMA account for a
15-year-old is taxed to the beneficiary at the beneficiary's rates.
6. Termination of a CUTMA account created as a
lifetime gift can be delayed until the beneficiary reaches age 21 if
delayed distribution age is designated upon the creation and funding
of the account.
7. A donor to a CUTMA account can limit
distributions to payment of a beneficiary's education expenses.
8. CUTMA accounts created and funded by a parent
who serves as the custodian of the account may be included in their
estate for estate tax purposes if he or she dies before the account is
exhausted or terminates.
9. Transfers to CSP accounts and Education IRAs
are completed gifts for federal gift tax purposes and are generally
not included in the donor's estate for estate tax purposes.
10. Federal law prohibits more than one
individual to contribute to a CSP account established for a single
designated beneficiary.
11. The maximum amount that can be contributed to
a CSP account for a single beneficiary in a single year is $2,000.
12. Income earned and accumulated within a CSP
account or Educa-tion IRA account is not generally subject to current
income.
13. If distributions from a CSP account are
applied in 2002 for a child's tuition, books, fees and limited room
and board expenses, the distributions may be excludable from taxable
income for federal income tax purposes.
14. Distributions after 2001 from Education IRAs
for private secondary school tuition may be excludable from taxable
income for federal income tax purposes.
15. Distributions from CSP accounts for private
secondary school tuition may be excludable from taxable income for
federal income tax purposes.
16. After 2001, it is possible to transfer a CSP
account balance to another CSP account for the same beneficiary under
another qualified tuition assistance program.
17. It is possible to change the designated
beneficiary of a CSP account to a sibling, spouse, child or grandchild
of the original account beneficiary.
18. CSP accounts can be pledged by the account
owner to secure a loan obtained by the account owner.
19. CSP accounts and Education IRAs both allow
the account owner the ability to actively manage day-to-day
investments within the account.
20. Contributions made to Educa-tion IRAs and CSP
accounts are deductible for federal income tax purposes. |
