COLLEGE SAVINGS

The cost of educating the next generation is turning into a formidable task. According to many surveys, the cost of attaining a college education has increased at an annual rate of between 5 and 7 percent. Considering this significantly outpaces wage inflation, it is all the more reason to start saving as soon as possible for your child or grandchild. College savings should never be done at the sacrifice of retirement savings, however.

With that being said, not all college savings vehicles are created equal. Understanding the most efficient means of saving can carry some tax advantages and mean better financial aid consideration for your student, if needed. Some of the typical vehicles include 529 plans, Educational Savings Accounts (ESAs), and UTMA/UGMA Custodial Accounts. Each of the aforementioned has unique advantages, although 529 plans have emerged to provide a fair amount of flexibility and benefits over the ESA and the Custodial Accounts. An often overlooked option is a Roth contribution. Depending on your situation, it may be most appropriate to consider funding a Roth contribution to your IRA or 401k first if you are eligible. The account will grow over time and the contributions could be withdrawn prior to retirement to fund college education. The interest and any gains earned over the years will continue to grow tax-free for qualifying retirement needs down the road.

Give us a call to discuss the option that may best fit your needs best.