Should College Savings Be in a Parent or Child’s Name?

Question: When saving for college, is it better to have money in the child’s name or a parent’s name? How does this affect financial aid?

Can I Roll Over My 401(k) Without A Penalty?

Question: I attended a community college for around two years and during that time I had a job with a 401(k) that accumulated a modest $2,000. Last August, I had to quit my job in order to attend the University of Illinois at Urbana-Champaign. Now, I am faced with the decision of what to do with my 401(k). The plans administrator recently sent me a letter letting me know that I had to act on the plan and either withdraw the money or they would roll it over to an IRA.

Is there typically a fee or penalty, whether from the IRS or the plan’s administrators, for the rollover and, if so, typically how much? And more importantly, will my plan to rollover my 401(k) to an IRA, for the purpose of making an education expense withdrawal, and avoid the typical 10% penalty, work? Or may I not make a withdrawal from an IRA that early?

– Jessica Radek, Northlake Il.

Where Should I Invest College Savings?

Question: I was planning to move money tagged for college expenses three years from now from a balanced fund to a tax-exempt bond fund. Now, based on all the chatter about bond funds heading downward, I am at a loss as to where to put the money, or if I should move it at all.  While safe, savings accounts and short-term certificates of deposit just don’t seem right to me.  Any suggestions on what to do to best preserve my investment?

– John Fuoss, Plano, Texas.

Can My Ex-Wife Deduct College Costs I Pay?

Question: I am divorced. My son is 18 and is attending college this fall. I am paying his tuition, books, and fees. My ex-wife has asked if I can send her the money and she will pay the college costs from her account so she can claim one of the tax credits. I just miss the adjusted gross income (AGI) for any tax credit but she does not. I will not be receiving any monies based on her tax savings and/or refund. I do not receive anything from her at any time. Would this violate the law?

Do I Make Too Much to Deduct College Costs?

Question: My wife and I have a joint income of about $300,000 and we pay about $60,000 annually for our daughter’s college expenses. Is there a way to deduct any of these expenses from our tax bill?

– George Schienbein, Castro Valley, Calif.

Insurance-Based College Savings or 529s?

Question: How do insurance-based college-savings programs compare with 529 plans? And do they count in the federal financial aid calculation?

– Thomas Kaye, New York City