Saving for your child’s college tuition is a valuable investment in their future. As tuition costs rise, it has become more important than ever to develop a smart financial plan for college savings, even if your child is still very young. There are a variety of college savings plans and options available; discussing your situation with your financial planner in Tucson is the best way to determine which savings solutions are right for you.
529 Plans
529 plans are dedicated college savings plans that offer federal tax-free earnings on your investments. These versatile state-sponsored plans are subject to various contribution limits and balance caps, which are determined by the state in which you hold the plan. You can opt to open a 529 plan in any state, regardless of residency, and the savings you put away may be used at any college of your choosing for all educational expenses, including tuition and room and board. In addition to traditional savings plans, there are also prepaid 529 plans, which allow you to purchase tuition credits at today’s rate to counteract the effects of future inflation.
UTMA and UGMA Plans
UTMA (Uniform Transfer to Minors Act) and UGMA (Uniform Gift to Minors Act) plans are custodial accounts that a parent can open for their child. These accounts can be grown through cash contributions, as well as stocks, bonds, annuities, and other assets that you wish to put aside toward your child’s future education. When determining the amount of financial aid your child is eligible to receive, his future school of choice will take into account the amount of money in a UTMA or UGMA plan, so it’s important to discuss these options and the best way to use them with your financial planner.
Are you looking for a smart way to grow your child’s college savings? At Financial Directions, LLC, we specialize in college savings, retirement savings, and more to help you make the best decisions for your family’s future. You can reach us by phone at (520) 408-7777, or visit our website to learn more.
