College Financial Planning

Many families put money aside from their paychecks for their child’s education. A typical savings account allows you to earn interest on the money you put in — but there are special education savings accounts which also allow you to contribute to a child’s education that offer tax-free growth and tax-free qualified withdrawals. These features can help your money go farther.

Our college financial planners have experience setting up different types of education savings accounts, including:

529 College Savings Plans
This is a state-sponsored savings plan offering several portfolios to choose from. Funds within the portfolio can be reallocated twice a year, offering greater flexibility for the account owner. The name 529 comes from Section 529 of the Internal Revenue code, which specifies the plan’s tax advantages.

Coverdell Education Savings Accounts (ESAs)
One key difference between an ESA and the 529 plan is that an ESA allows the account owner to choose almost any kind of investment option, including stocks, bonds and mutual funds. This plan has income restrictions, and the money must be used by the beneficiary by age 30 to avoid taxes and penalties, unless the beneficiary has special needs or it is given to another family member below the age of 30. The total amount contributed is limited to $2,000 per year. An ESA is also commonly referred to as a Coverdell ESA.

With both savings plans, the funds grow tax-free and are not taxed upon withdrawal when used for qualified expenses, including college tuition and fees, room and board, school supplies, transportation and other eligible personal expenses. These accounts generally have minimal impact on your child’s eligibility for federal financial aid, including grants.

As a busy parent, you already have enough on your plate without worrying about how to make college affordable for your child. An experienced college financial planner in St. Charles can help you build a comprehensive plan using these services:

Defining Future Goals & Objectives
Your family’s college savings plan should be tailored to your goals — whether you want to fully fund your child’s education or offer a set amount for multiple children with different graduation dates. Most importantly, this plan should fit in to your lifestyle without preventing you from living comfortably and saving for retirement.

Identifying Savings Strategies
A tax-advantaged education savings account can help your hard-earned money go farther. Your St. Charles college financial planner can also help identify any possible tax incentives for participating in certain state-sponsored education plans, as well as positioning your child to maintain eligibility for scholarships and other funding.

Creating a Customized Financial Plan
There is no “one size fits all” financial plan. Your advisor will work with you to identify a solution that is tailored to your needs. If you started saving before the birth of your child or fell behind, or you are putting money aside for college while paying private school tuition, let’s make a plan to help you reach your goals.