1. Tax Advantages With an Education Savings Account

    Education Savings Account Tax AdvantagesA qualified education savings account usually offers federal tax advantages to participants. The key factors are “how much” and “how they work” for investors. While you can use any savings or investment account to plan for college, qualified college investment funds offer tax advantages that standard accounts do not.

    For example, a Coverdell Education Savings Account (ESA) offers tax-free earnings increases, if the parent qualifies. If the parent (or child) has “modified adjusted gross income” less than $110,000 (or $220,000 for joint tax returns), and your child is under 18, you qualify for these college savings accounts. If you only withdraw funds for your child’s education expenses each year, these withdrawals are also tax-free.

  2. Compare College Savings Planning Option Features

    Compare College Savings OptionsWith consistently rising education costs, college savings planning is a necessity. But which plan is right for you? Consider your financial situation now and in the future, the age of your child when you start, and then set reasonable goals for yourself.

     

    Federal Government Plan

    Saving money for college can be accomplished courtesy of the US government. Your Congress sponsors the Coverdell ESA (education savings account) plan for those earning less than $110,000 (single tax filer) or $220,000 (joint tax filers) per year.

    Although it has a modest annual contribution limit–$2,000 per student per year—withdrawals are tax-free if used for qualified education expenses. Qualified expenses include tuition, room, board, fees, and supplies.

    You’ll also enjoy personal investment flexibility, as you can invest in stocks, bonds, mutual funds, and cash equivalents. You have no restrictions on the number of trades (buy or sell) you want to make.

  3. Most Popular College Investment Funds

    Popular College Savings PlansWhile many people consider college savings plans the same as college investment funds, there is a difference. When you save for college using standard bank or credit union accounts, you receive a stated return (interest) at a disclosed rate.

    Technically, college investment plans generate earnings based on the performance success—or lack—of the college investment options you choose. You should also evaluate child investment options in light of the presence or absence of tax consequences for earnings and/or withdrawals.

  4. Where to Get Help for College Planning

    College planningCollege planning often seems like a daunting challenge when you hear or read about the cost of a university education. Unfortunately, college costs continue to escalate and projections indicate that those parents and students without college funding plans will come up financially short for education expenses. But, where can you turn for help with college investment plans? Here are some suggestions for college funding options.

     

    College counselors. Like professional career coaches, college counselors try to help students and parents navigate the maze of scholastic and financial planning needed to have a successful university experience.
    College investment planning funds. College funding options, like the Gerber Life College Plan, offer help and information along with programs structured to saving for college. With flexible options, you can plan for college at affordable investment dollars.

  5. Five Good Ways to Save for College

    Saving for college is challenging, but you have some excellent options. When you save for college, knowledge is power. The key is to identify the college funding options that are best for you. Here are some proven suggestions.

    1. 529 College Savings Plan. College planning becomes easier and cost effective with a 529 educational savings account. Two features are primarily important: You can contribute up to your state maximum per year. Equally important, your earnings will grow tax-free.
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