Solid financial options to pay for college
Are you looking to sock away some scrilla for your child, grandchild or another loved one headed to school? There are many ways to prepare for the growing costs of higher education.
Consider the following options and discuss your investments with a highly rated financial planner.
529 Savings Plans
These tax-advantaged plans allow you to save your money in mutual funds or other investments whose value is subject to the performance of the market, much like a 401(k) plan. Your investment will grow tax-free and withdrawals are also tax-free if they are applied to qualified educational expenses. Your investment may qualify for tax benefits in your state.
529 Prepaid Plans
These 529s allow you to pre-pay for all or some of the costs associated with attending an in-state public school. Your investment will grow tax-free and withdrawals are also tax-free if they are applied to qualified educational expenses. You may be able to convert them to fund costs at a private or out-of-state institution.
Coverdell Education Savings Account
If you want to invest money that can be used to help fund a child's kindergarten through college schooling, you can save up to $2,000 per child per year in a Coverdell ESA. You can make annual non-deductible contributions to the fund until the child turns 18 and many withdrawals will be tax-free.
Uniform Gift to Minors Act (UGMA)or Uniform Transfer to Minors Act (UTMA)
These custodial accounts allow you to transfer gifts or property to a minor without a trust. These accounts can provide tax benefits to the investor. No income or contribution limits exist on UGMA/UTMA accounts, which are transferred to the beneficiary when he or she reaches a certain age, depending on your state.