The cost of a college education increases every year. The earlier you start saving, the less painful when your child is ready for college. Parents have several options when it comes to saving for their child’s education including traditional savings accounts and 529 College Plans. At James T. Borello & Co., our consultants are experienced in working with the various savings vehicles for education as well as traditional investment accounts. We examine your current financial situation and your long-term savings objectives to craft an investing strategy that works for you.
Types of Educational Savings Accounts
There are two main types of tax-advantaged ESAs. They include:
- 529 College Savings Plans—These plans offer greater flexibility than prepaid tuition plans, and parents can contribute up to $13,000 per child, per year, tax-free depending on the state. Parents can save up to $366,000 in a 529 plan. These plans are optimal when saving for more expensive tuition costs and have some favorable gift contribution rules.
- 529 Prepaid Tuition Plans—These plans protect against tuition increases from inflation by allowing parents to pay for future tuition to in-state public colleges at today’s rates. If your child chooses to attend a private or out-of-state college, the plan will usually pay out what it would have paid for in-state public tuition.
Choosing how to save for your child’s education can be challenging given the different options and benefits. Contact us to speak with an experience financial consultant who can provide guidance based on your unique circumstances and objectives.