J
jms2l
My daughter will be a freshman next year at a private university.
They have a plan where I can prepay up to 8 semesters at the current tuition if I pay by July 1. This isn't a 529, or anything like that, it's just a prepayment. If for whatever reason she withdraws or transfers, they just refund the unused amount in full.
The college does not report anything to the IRS except what they bill each semester.
I have questions about the tax implications. Are there any? There do not appear to be to me.
Tuition inflation has been running about 4% per year, so this seems like the unused balance will effectively return 4% tax-free per year if my daughter does go the expected 4 years in the sense that I would have otherwise had to pay the higher tuition.
Any thoughts?
They have a plan where I can prepay up to 8 semesters at the current tuition if I pay by July 1. This isn't a 529, or anything like that, it's just a prepayment. If for whatever reason she withdraws or transfers, they just refund the unused amount in full.
The college does not report anything to the IRS except what they bill each semester.
I have questions about the tax implications. Are there any? There do not appear to be to me.
Tuition inflation has been running about 4% per year, so this seems like the unused balance will effectively return 4% tax-free per year if my daughter does go the expected 4 years in the sense that I would have otherwise had to pay the higher tuition.
Any thoughts?