You have big plans for college, and that could come with a big price tag. Prepare by creating a savings strategy and actively setting aside money for your future education expenses.
If you are planning on attending college one day, we recommend starting to save now. Below are options to consider.
Coverdell Education Savings Account (ESA)
The Coverdell Education Savings Account (ESA) was created by Congress to promote savings for future educational expenses.
- Opened on behalf of a child under age 18 (beneficiary)
- Contributions made on behalf of the beneficiary
- Contributions are not tax deductible
- Withdrawals can be made tax-free when needed for education expenses
529 College Savings Plan
The 529 College Savings Plan is a tax-advantaged savings plan designed to promote saving for future college expenses.
- Sponsored by states, state agencies, or educational institutions
- Opened on behalf of a beneficiary for future college expenses
- Account holder can choose from several investment options (such as stock mutual funds, bond mutual funds, and money market funds)
- Account holder may receive special tax benefits
- Earnings are not subject to federal tax (and most cases, state tax) as long as withdrawals will be used for eligible college expenses
- 529 College Savings Plan requirements are dependent on state in which you reside
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategy, if any, may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. The tax information provided is not intended to be a substitute for specific individualized tax planning advice. We suggest that you consult with a qualified advisor.