Prepare for College Funding by Knowing Your Options for Saving!

     Visiting your local Naperville education planning professional today instead of five years from now is essential to the future of your child.  The two biggest things as adults we can do are buy a home and plan for our retirement.  The next big thing is college planning.  The cost of higher education is rising every year and parents are trying harder than ever to make their money go farther.  Two popular government plans are around to assist you as the parent in saving for their future.  The first is the Coverdell and the second is the 529 plan.

The Coverdell is an education savings account.  It is a sponsored plan by the federal government to allow you to set aside money for education expenses.  The expenses can include tuition, books, supplies and dorm room costs.  The contributions to the savings account are not tax deductible but the withdrawals are tax-free as long as they are used for the above expense categories.  On top of this, there is a cap on the amount of contributions you can make each year.  The Coverdell education savings account is established as a custodial account.  It is set up by the parent or another adult to pay the school expenses of a designated person.  The child must be under 18 to have the account established and all balances must be spent within thirty days of their 30th birthday.

The 529 plan is not tax deductible either but the withdrawals is tax-free when used for an education expense.  The expense only applies to the cost of tuition, not the additional categories listed for the Coverdell.

I know it can be confusing on the best category to choose from however, by contacting a local Naperville education planning professional, the process can be fairly easy.