Your Money, Your Plan!
When you take control of your finances, rather than letting them control you, you can live life more fully. Regardless of your age or life stage, you can make financial decisions that move you toward your goals.
College Planning
College/education planning generally revolves around options for college/education funding. While we can hope for scholarships, loans may be the more likely alternative without ready college funding. And while funding for education may be a priority, consideration must be given to the overall household budget and it's impact on retirement funding. Below are three college funding plans that offer tax benefits to the household:
The Uniform Transfer/Gift to Minors Act (UTMA or UGMA) are designed to be controlled by the custodian for the benefit of the minor, until the minor reaches the age of majority. When the minor reaches the age of majority, the funds are no longer restricted and can be used for college, or anything else. Contributions are primarily the same limits as the estate gifting limits. Growth will depend on the investments in the account. These are essentially savings accounts for minors, and while there are some tax benefits, they are limited, since funds can be used for anything.
The Educations Savings Account (ESA) allows $2,000 (after tax), per child, per year, and growth will depend on the investments in the account. Withdrawals to pay for education expenses are tax free. There are income limits to qualify, amounts in the account must be used by the student beneficiary by age 30 and accumulations will probably not fund a full four year degree.
The 529 Plan allows contributions with the same limits as the estate gifting limits, but exceptions may allow $300,000 per child. 529 Plans are state run funds with growth dependent on the investments in the account. There are some restrictions, but they can be transferred among members of a family and withdrawals for education expenses are tax free.
