Planning on Sending a Child to College?
You probably started thinking about financial planning for college when your child was very young.
You’ll need a good estimate of the cost of your child’s education, based on the year in which you expect he or she will enter college. To come up with an estimate for specific years and/or specific colleges, you can contact your Financial Planner.
College Savings Strategies
What are 529 Plans?
529 plans were authorized by Congress in 1996. They are administered by the states and provide families with tax incentives to encourage saving for college. States implement their own 529 plans in various ways, with each having its own conditions, but all 529 plans are exempt from federal income tax.
Lock in the Price of College Today
Prepaid tuition plans lock in the price of tuition at today’s rates, no matter what the rate actually is when your child enters college. Prepaid tuition plans are operated by state governments.
Save for College Over Time
An alternative to prepaid tuition plans are investment plans. Investment plans can offer more flexibility and control to the owner and their beneficiaries.
Coverdell ESA/Education IRA
Coverdell Education savings accounts can be used to pay for your child’s qualified expenses from kindergarten through high school in addition to higher education costs.
Coverdell ESA plans are not for everyone. Using this option may jeopardize your chances for state financial aid if you would otherwise qualify.
Uniform Gift to Minors Act/Uniform Transfer to Minors Act
UGMA/UTMA custodial accounts let you take advantage of your child’s lower tax rate while saving for your child’s education. Withdrawals can be used for more than education costs, but always must be used for the benefit of the minor.
Custodial accounts are not for everyone. Using this option may jeopardize your chances for state financial aid if you would otherwise qualify.