Question

Match each of the following college savings alternatives with the appropriate feature. 1. Earnings on account assets are fully taxable when distributed to pay for qualified educational expenses. 2. The maximum annual contribution to one beneficiary's account is $2,000. 3. Distributions of contributions to pay for expenses are not taxable. 4. Contributions made to the account may be tax deductible at the state level. 5. Distributions used to pay for qualified educational expenses are not tax free if the asset is owned by the person going to college. CESA Roth IRA Savings bonds Taxable savings 529 plan

Answer 1

College savings alternatives such as ESA, Roth IRA, Savings Bonds, and 529 plans have unique tax features. ESA has a $2,000 annual contribution limit, Roth IRA provides tax-free distributions for educational expenses, Savings Bonds' earnings are taxable upon distribution, and 529 plans may offer state tax deductions with tax implications when the account owner is the student.

Step-by-step explanation:

Matching College Savings Alternatives with Features

Here is a breakdown of which college savings alternatives correspond to the features listed in the question:

1. ESA (Education Savings Account) - The maximum annual contribution to one beneficiary's account is $2,000.
2. Roth IRA - Distributions of contributions to pay for expenses are not taxable.
3. Savings Bonds - Earnings on account assets are fully taxable when distributed to pay for qualified educational expenses.
4. 529 Plan - Contributions made to the account may be tax deductible at the state level, and distributions used to pay for qualified educational expenses are not tax-free if the asset is owned by the person going to college.
5. Taxable Savings - This type does not have a specific feature listed from the options provided, but generally, the earnings would be fully taxable.