Saving for your child’s future is a valuable gift. Choosing the right vehicle for your savings can help you make the most of tax credits and interest advantages to grow the money you put toward your child’s future even faster. An experienced financial planner can help you find the right method to gain the most benefit from the money you put away for your child’s benefit later in life.
529 College Plans
If you want to specifically fund your child’s education, 529 college plans provide tax-free savings. These plans remain in your name and let you change your desired beneficiary at any time, allowing you to transfer the plan to a different name if your child decides not to attend college. 529 plans can be used to cover expenses such as tuition, room and board, and educational supplies, including textbooks. While there are a limited number of savings options, you can opt to change your plan once a year to take advantage of market changes.
Roth IRAs
Once your child reaches an age where he can earn his own wages, a Roth IRA is an excellent vehicle to give him a head start on saving. Roth IRAs offer tax-free savings growth; while there are restrictions against removing funds without tax penalties before the age of 59.5, exceptions include the purchase of a first home or qualifying education expenses. This means the money you put toward your child’s future can only be used for large-scale purchases while he is a young adult, or alternatively benefit him when he reaches retirement. Thus, a Roth IRA is the perfect savings option if you are concerned about how your child will use the money you put toward his future.
Whether you’re planning your child’s college education or saving for your retirement, Financial Directions, LLC of Tucson can help. Our financial planners have the experience necessary to help you develop a smart savings plan that will deliver the results you want. You can reach us online or by calling (520) 408-7777 to schedule a meeting and get started saving today.
