Tax-preferred College Savings Choices
One of the best legacies parents can leave the world is well-educated children. The costs of that legacy continue to rise at an ever-increasing pace. Fortunately, there are tax-advantaged plans to give families a boost as they accumulate capital for meeting education expenses. With each plan, there’s no tax deduction for setting money aside, but taxes are deferred on earnings. Withdrawals used for qualified education expenses, such as tuition and books, are completely tax free.
529 College Savings Plans
529 Plans are offered by states and contributions can come from anyone (relatives and friends). A First National Investment Executive can:
- Guide you through the different plan options
- Determine the plan suited for you
- Before investing in a 529 plan, carefully consider whether you or your beneficiary's home state offers any state tax or other benefits available only from that state's 529 plan
Coverdell Education Savings Account Plans
Unlike 529 plans, these plans are owned by the child and can be used for qualifying education expenses including ones prior to college. Work with a First National Investment Executive to:
- Assess your risk with select investments in these plans
- Obtain guidance on different plans available to you
- Recommend investments that match your savings needs
UTMA/UGMA Plans
These plans vary from state to state and are subject to taxes each year. These accounts are in a child's name and the responsibility is on them to pay the taxes, though they are taxed at a lower rate. These are opened through a regular brokerage or mutual fund account. A First National Investment Executive can:
- Review which is best for you and your family
- Evaluate pros and cons of the account
Start Planning for College Today
Whether you're a new parent who has years to invest or a parent of a high school student whose investment time frame is very short, a sound strategy can help meet your needs. Don’t let doubt or uncertainty lead to indecision. Wondering which plan is right for your future scholar? Let us help you sort through your choices, and you can implement your planning with a sense of confidence. Read our tips on how to start paying for college.
To open up a college savings plan in Southern Wisconsin or Northern Illinois, contact our Wealth Management Team online or visit one of our convenient locations. FNBT has offices is Argyle, Beloit, Clinton, Darien, Delavan, Elkhorn, Janesville, Monroe, Walworth, and Williams Bay, WI and Rockton, Roscoe, and Winnebago, IL.