Saving for Education

Hi, my name is Mei Carmer and I’m an associate financial advisor here at Katterhenry Investment Group. Let’s talk about smart education savings. There are several approaches you can take to save money for your children’s education. In today’s video, we’ll discuss a few options.

First and foremost, 529 Plans. This is one most people are familiar with. These are tax-advantaged savings plans that allow you to contribute to a child’s future college tuition expenses. Although there is no annual contribution limit, contributions are considered gifts and capped at $16,000 per year. Contributions are not tax deductible, but the money grows and withdrawals are tax free, as long as they’re used for qualifying educational expenses.

Let’s talk about another option. You don’t have to use a plan designed specifically for education expenses. You could also consider custodial accounts known as UGMA’s and UTMA’s. There are no spending restrictions on these accounts, so the beneficiary isn’t required to spend the funds on education expenses.

Another option is a Roth IRA, which is typically used as a retirement fund, but could also be used for college savings. Withdrawals for qualified education expenses are exempt from early withdrawal penalties.

Please note that the information in this video is for general informational purposes only and should never be considered professional advice. It is always a good idea to speak with a professional who can help you determine which options fit your family. Start saving for your child’s college as soon as you can to take advantage of the power of compounding returns, and continue to make regular contributions as your child grows. Have questions? Just give us a call.

© 2022 Wells Fargo Clearing Services, LLC. All rights reserved.

FINRA’s BrokerCheck Obtain more information about our firm and its financial professionals

FINRA’s BrokerCheck Obtain more information about our firm and its financial professionalsX