Putting children through college is one of the largest expenses most families will ever face. For a child born today, the cost of tuition, room, board and other expenses will likely approach $140,000 for four years of public college-and an astounding $310,000 for four years of private college.
That's a lot of money. And that's why planning ahead is so important. We can help you choose from the many available approaches such as custodial accounts (UGMA), trusts, parent's investment accounts, the Coverdell Education Savings account, and 529 Plans.
Which savings plan is best for you depends on many things such as how much you can invest, your adjusted Gross Income (AGI), how often you may want to change investments, who will own the account, etc.
Most experts agree that Coverdell Education Savings Accounts and 529 Savings Plans are the best college savings vehicles ever made available. In the 529 Plan, the earnings and withdrawals for qualified higher education expenses are free from federal tax, there are no income limits, you can contribute until your account value reaches $250,000 and you maintain control of the assets. With the Coverdell Education Savings Account (formerly called the Education IRA) earnings and qualified withdrawals for education are free from federal tax, you can invest $2,000 per year, you can use the assets to pay school expenses from private kindergarten through high school, as well as college and graduate school, and there is flexibility to change investment options as often as you wish.
Please contact us for an analysis as to how much to save, what vehicle is right for you, and which investments are appropriate to meet your education objectives.
These benefits are effective through 2010 unless extended by Congress.
Once the account value reaches $250,000 through investments or growth, no more contribution will be accepted.