We all want our children and grandchildren to be successful. But how is success measured? Is it defined by achieving financial security, pursuing a lifelong passion or career or something else completely? For many of us, it is a combination of things. But most often, it starts with a college education.
Saving for college is extremely challenging as costs continue to climb. Fortunately, there are investment options available to make saving easier. The key is to learn what makes the most sense for your financial situation.
529 Savings Plan
529 plans allow investors to save money on a tax-deferred basis. When funds are used to pay for qualified higher education expenses, withdrawals are free from federal income tax. When you own a 529 account and name your child as beneficiary, you never lose control of the money. You can even change the beneficiary to another child or yourself if you want to go back to school.
Coverdell Education Plans
Coverdell Education plans are designed to offer tax-free asset growth for education. Eligible individuals can contribute up to $2,000 per year per child up to age 18. Instead of focusing solely on college expenses though, investors can use Coverdell assets for anything from kindergarten on up. The contributor’s annual income must be below a specific minimum (currently $220,000 for married couples filing jointly). Unlike 529 plans, contributions are made on an after-tax basis.
Who Can Assist Me?
Take steps now to begin planning for your children’s future – visit Consumers Credit Union and meet with a CFS* Financial Advisor. Call 800.991.2221 to arrange for your complimentary consultation.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Consumers Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
Investors should consider investment objectives, risks, and charges associated with Section 529 plans prior to investing. Contact your investment representative or carrier for more information about municipal fund securities which is available in the issuer’s official statement or plan disclosure document which should be read carefully prior to investing. Most 529 plans are sponsored and administered by states. State tax benefits vary among the states, and some offer residents additional tax benefits if they invest in their own state plan. Consult your tax adviser for more information.