Planning for your child’s education is an essential part of preparing for their future. At Keel Financial Partners, we understand the importance of education planning and strive to provide our clients with the necessary tools and strategies to make informed decisions. In this blog post, we will explore different options for education planning, including GET, 529s, UTMA, and Coverdell accounts.
GET (Guaranteed Education Tuition)
GET is a state-sponsored prepaid tuition program that allows families to prepay for future college tuition at today’s rates. It provides an option for families who want to lock in tuition costs and seek to protect against rising education expenses. With GET, you can pay in advance and help ensure that your child’s education expenses are covered when the time comes.
529 Plans
529 plans are tax-advantaged savings plans designed specifically for education. They offer a range of investment options and tax benefits, making them a potentially attractive choice for many families. These plans can be used for qualified higher education expenses, including tuition, fees, books, supplies, and even certain room and board costs. The earnings in a 529 plan grow tax-free, and withdrawals are tax-exempt when used for qualified education expenses.
Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
UTMA (Uniform Transfer to Minors Act) Accounts
UTMA accounts are custodial accounts that allow parents or guardians to save and invest on behalf of a minor. These accounts offer flexibility and can be used for various purposes, including education expenses. While UTMA accounts do not have the same tax advantages as 529 plans, they provide more flexibility in how funds are used, as there are no restrictions on qualified education expenses.
Coverdell Education Savings Accounts
Coverdell accounts, also known as Education IRAs, are another tax-advantaged option for education savings. They allow contributions of up to $2,000 per year per beneficiary and offer tax-free growth and tax-free withdrawals when used for qualified education expenses. Coverdell accounts can be used for both primary and secondary education expenses, as well as higher education.
When it comes to education planning, there are multiple options available to help you save and invest for your child’s future. Whether you choose GET, 529 plans, UTMA accounts, or Coverdell accounts, it’s important to consider your goals, financial situation, and the specific needs of your family. At Keel Financial Partners, we specialize in education planning and can provide personalized advice and guidance to help you make informed choices for your family’s future. To learn more about education planning and our services, visit Keel Financial Planning – Education Planning.
Disclosures
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific situation with a qualified tax advisor.
No strategy assures success or protects against loss.
Investing involves risk including loss of principal.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Winthrop Wealth, a Registered Investment Advisor. Keel Financial Partners and Winthrop Wealth are separate entities from LPL Financial.
