A high-quality education is what we all want for our kids. It’s becoming a standard that many employers ask from applicants in today’s competitive marketplace. Thankfully there are a few resources available to help make sure that the question of “how are we going to pay for college?” is answered.
UGMA/UTMA accounts can be a good way for parents, guardians, and grandparents to save money for a minor. These accounts allow the parents to maintain control of the assets until the minor becomes an adult. During this period the parent or grandparent has full access to the allocation of funds. Funds are owned by the minor but don’t have control or access to them until they’re of legal age, of 18 or 21 depending on the state you live in.
Another savings plan we offer is a 529 College Savings Plan. This plan allows parents, guardians, or grandparents to set up an account that benefits a minor for educational expenses. What sets this account apart from the UGMA/UTMA is that the donor has full control of the account. This means that they take ownership for the benefit of a designated minor or beneficiary. Funds in 529 accounts grow tax-free for qualified expenses like tuition, books, and room and board. Tax-free growth is the real benefit here. Letting these funds compound over a long period of time is a major benefit.
One other benefit of setting up a 529 College Savings Plan is that it is transferable. If you set up a 529 for your first-born child and there is money left over after they finish school, or don’t go to school. The remaining assets in the 529 Plan can be transferred to child number #2. This gives you a lot of options on how to pay for all of your children’s educational expenses.
If you’re interested in setting up a 529 plan for a loved one, please reach out to our office so that we can assist you with setting it up.