If paying for education is among your financial goals, our team at StackStone Wealth is here to help. There are different options to save for college, but choosing an approach for your family will depend on your priorities, time horizon, long-term goals, and tax situation.
An Ameriprise financial advisor can help evaluate different possibilities and develop a savings strategy. Our team members with offices spanning across Michigan, Iowa, Illinois, and Wisconsin can help manage possible college debt, while keeping your financial priorities in mind.
529 Plan
529 accounts are an option for children of all ages. A 529 plan allows individuals to contribute after-tax money into an investment account on behalf of a designated beneficiary. Contributions grow tax-deferred, and withdrawals are tax free if they are used for qualified education expenses, which include tuition, room and board, books, fees, and student loan repayment.
Coverdell Education Savings Account
Coverdell Education Savings Accounts (ESAs), function similarly to a 529 plan. However, certain K-12 expenses are also considered qualified through an ESA. With this type of account—you can utilize the annual gift tax exclusion and control how the money is invested and spent while your child is a minor. These accounts have a lower maximum contribution limit ($2,000 per child) and are only available to families below a specified income level.
Roth IRA
With a Roth IRA, the amount you contribute can be withdrawn tax and penalty-free at any time for any purpose. Earnings in the account grow tax-free but can only be withdrawn after 5 years from the date of the first contribution and have reached a triggering event.
UGMA and UTMA
Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts are custodial accounts that allow you to save and transfer financial assets to a minor without establishing a trust. The main differences between these two accounts are the assets that make up each account.
Financial Aid
Financial aid includes any college funding that does not come from family, personal savings, or earnings. Some financial aid options include grants, scholarships, student loans, or the federal work-study program. For more information about College Savings, click here.
Helping Plan for the Future
Planning for your child's education is a journey. Starting early, staying consistent, and seeking professional guidance can help make this journey successful. For personalized advice and to learn more about how we can assist you in planning for education, contact us at StackStoneWealth@ampf.com.
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