College Planning
A college education is the surest way to establish a professional career path and increase earning potential.
But tuition and room and board at a private four-year institution can cost over $100,000. What's more, if college expenses continue to increase at the current rate of 5 percent each year, by the time today's pre-schooler goes off to college, four years at a private institution could easily cost over $200,000.
College Savings Options
Taking advantage of the tax benefits offered by college savings vehicles can dramatically increase the amount you can invest for your child's college expenses. Because plans like a 529 plan, Prepaid Tuition and Education IRAs allow you to defer taxes on your investment gains until you withdraw the money, your assets have a chance to increase at a faster rate. We can show you a number of options available to help make college funding easier:
- 529 Plan*: Offering tax-deferred earnings, a 529 Plan is designed for all income levels and investment styles. It allows you to give up to $55,000 - with no federal gift tax impact - so you can save for college while retaining control of your assets. It requires a low minimum investment, and parents, grandparents, other relatives and even family friends can all participate. A 529 Plan offers a valuable combination of income, estate and gift tax benefits.
- UGMA/UTMA Accounts: This a custodial account opened in the name of a minor as a Uniform Gifts to Minors Act (UGMA) or a Uniform Transfers to Minors Act (UTMA) account. It allows you to invest in mutual funds and individual securities on behalf of a minor.
- Education IRA: This is a non-deductible IRA that can be used specifically for college expenses. It can be opened by a parent, grandparent, relative or friend. It is especially suited for a parent wanting to save towards a child's college education using a range of investment choices, including mutual funds and individual securities. Earnings are tax-exempt, but contributions are not tax deductible.
- Prepaid Tuition Plan: Allows you to lock in tuition at today's rate. This plan is sponsored and guaranteed by individual states for participating state schools. Earnings are tax-exempt, but contributions are not tax deductible. Investment gains and income grow tax-free until the money is withdrawn. Money will be taxed at the child's rate at time of withdrawal.
Contact a Representative today
Whether you're planning for retirement, funding a college education or protecting your assets, we can help.
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