Thanks to nearly four decades of experience in education planning, we can offer you intelligent options and help you choose the right vehicle for your education account. We’ll take the time to consider your family’s educational funding needs, available assets and time horizon and develop a unique plan for you using one or more of the following options:

529 Plan

To set up a college savings account, we recommend a 529 Plan, but we encourage parents to research the options available to them within the plan. Most states offer plans with age-based allocation options, but the administration options vary from state to state and not all plans offer a guaranteed rate of return.

The advantage of a 529 plan is that the money grows tax free, it is “qualified” for educational purposes; in most cases this means tuition, room, board, books, travel and school supplies. Most of these plans have very low minimum contributions.
Assets from a 529 plan are protected from bankruptcy.

Educational Savings Account (Coverdell)

Another option for those investors who want a little more control over their account is an educational savings account. The benefits of this account depend entirely on the income levels of the contributor. For anyone seeking financial aid, however, colleges consider assets in one of these accounts the student’s and not the parents’, which reduces the student’s eligibility for aid.

There is an annual contribution limit of $2,000 per beneficiary and parents who exceed income limits are not permitted to make contributions. The money in the account grows tax free and withdrawals for educational purposes are tax-free up to a limit determined by the beneficiary’s qualified status (income level).

Roth IRA

A third excellent option, again depending upon your income levels, is to set up a Roth IRA account for educational purposes, which will not affect the student’s ability to receive financial aid. These accounts offer a wider range of investment options and parents or grandparents can contribute up to $7,000 annually ($8,000 if aged 50 or over) to a Roth IRA. A child working for his or her parents also can set up a Roth IRA. Contributions are not tax-deductible, but the investments grow tax deferred and are tax free when taken out. These withdrawals can be used to fund a child or grandchild’s education. If not needed, contributors are that much more prepared for retirement.

At Winch Financial, we advocate education for personal growth and expanded horizons, and understand that a comprehensive and conscientious discussion of your options will help you reach your goals.  We look forward to assisting you with strategic education planning.