when the distribution is made in the first year and considered income to the beneficiary, is it based on her tax bracket and if is low which is the best way to go? what is the 5.64% that is referred to? what is the best option and what is the timing factor? your article and marks advice are extremely helpful. thank you.concerned grandparent.
Terry Says: Don’t worry about income taxes. The money comes out of the prepaid tuition plan tax-free! What it does impact is any other financial aid for which the student might apply. And you can’t do anything about that, so don’t worry!