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With tuition costs rising each year, setting aside funds for college savings can be daunting. However, there are several tax options that may lessen the financial burden of college. We encourage you to review these plans with your family and your accountant to determine if one of them works for you.

Section 529 Plan

Consider putting after-tax money into a Section 529 college savings account. Contributions aren’t deductible, but earnings will grow tax-free in these plans when used to pay qualifying educational expenses.

This option is best for parents and grandparents who want to save for their kids’ school tuition and other related expenses while still receiving a tax break.

Coverdell Education Savings Account (ESA)

The Coverdell Education Savings Account is a flexible account in which you can choose from a wide variety of investments to meet your individual needs.

This option is best for students who have education expense costs and want additional investment options for education savings.

Custodial Account

If you’re looking for a savings option that goes beyond education, a custodial account may work well for you. With Uniform Transfers to Minors Act (UTMA) and Uniform Gift to Minors (UGMA) custodial accounts, you can generally invest in a wider variety of options versus a Section 529 plan.

This option is best for parents who give financial gifts to their kids and don’t mind handing over control of the accounts when they are 18 or older.

If you’d like to discuss these college saving options, please contact Cray Kaiser at 630-953-4900.