Six Ways To Save For College Early
Planning for your children’s financial future should begin as early as their birth. Actually, I did set up a 529 plan before we had children.
There are several ways to save for your children’s college education and reduce borrowing that you or your child will need to do for college later on.
Funding your children’s tuition well ahead of their needs allows for compounding benefits while enhancing your tax situation.
529 College Savings Plans
A 529 plan is a college savings plan that offers tax-deferred savings and financial aid benefits.
These accounts are similar to 529 plans offering tax-free investment growth and tax free withdrawals when funds are spent on qualified education expenses.
Coverdell Education Savings Account (ESAs)
Custodial accounts can be set up for each child if they are under the age of 14 years and managed by the parent.
3. Custodial accounts: Uniform Gifts to Minors Act or Uniform Transfers Minor Act
Traditional IRAs, typically used for retirement savings, would normally incur a 10% penalty for withdrawals before age 59.5 years.
4. Traditional IRAs
Another way to save for college costs, is to invest in deep discount corporate, US government (Treasury) or municipal deep discount bonds.
nvest in discount bonds
Savings bonds are sold by the federal government for half their value or $5,000 for maturity denominations of up to $10,000.
6. Series EE Savings Bonds
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