educational savings planning

529 College Savings Plan

  • You can contribute up to $13,000 ($26,000 for married couples) annually without gift-tax consequences. You may also be able to gift up to $65,000 ($130,000 for married couples) at one time without gift-tax consequences by accelerating 5 years worth of investments.
  • You can continue to contribute until the account value reaches $350,000
  • Earning can grow tax-free
  • Withdrawals for qualified higher education expenses are federally tax-exempt, however withdrawals for non-qualified expenses are subject to ordinary federal income tax and a 10% penalty on earnings
  • There are no income limits
  •  Anyone can contribute to the account
  •  You maintain control of the assets

 Coverdell Educational Savings Plan
  • Can contribute up to $2000 annually
  • Earnings can grow tax-free
  • Withdrawals for qualified education expenses are federally tax-free
  • There are income restrictions – phase outs for individuals start at $95,000 and at $190,000 for married couples
  •  Investment options can be changed as frequently as desired

 UGMA/UTMA
  • No contribution limits
  • For children under the age of 19 and full-time students under the age of 24 whose earning income is less that 50 % of their support, the first $950 of earnings are tax free. Earnings between $950 and $1,900 are taxed at the child’s’ rate. Any earnings over $1,900 are taxed at the parents’ rate
  • There are no income limits
  •  The beneficiary gains full control of the assets at age of majority (18 or 21 in most states)