Question

Certain types of investments may be tax-advantaged when used to help fund higher education. The growth in value and earnings from the investment are nontaxable if the proceeds are used to pay for qualifying educational expenditures. Which of the following types of investments qualify for this treatment?

a. Section 529 plans
b. U.S. Series EE bonds
c. Coverdell savings account
d. Municipal bonds
e. Roth IRA plans

Answer 1

a. Section 529 plans, b. U.S. Series EE bonds, and c. Coverdell savings accounts qualify for tax-advantaged treatment for funding higher education.

Step-by-step explanation:

Section 529 plans, U.S. Series EE bonds, and Coverdell savings accounts are all recognized as tax-advantaged investment vehicles for funding higher education. Section 529 plans provide tax-free growth and withdrawals for qualified education expenses. U.S. Series EE bonds allow tax-free interest if used for educational purposes. Coverdell savings accounts offer tax-free growth, and withdrawals are tax-free when used for qualified education expenses. However, municipal bonds (Option d) and Roth IRA plans (Option e) do not qualify for the same tax-advantaged treatment specifically designed for funding higher education expenses.

Options A, B and C are answers.