Page 12 - Ed guide 2022 Feb

GET SCHOOLED ON

EDUCATION SAVINGS PLANS

ccounts to pay for college or
even private high schools can
Abe a smart way for parents to
prepare for their children’s futures. Not
every account is the same, and certain
savings accounts could affect financial
aid eligibility and taxes. It is in parents’
and students’ best interests to educate
themselves on the various education
savings plans available to them — and
which ones make the most sense for
their families.

Families should do their research and
work with professionals who understand
the subtleties of school savings plans.
For example, according to Cappex.com,
a college information site, students’
income and savings have a larger, more
negative impact on the availability
of financial aid than the portion of
their parents’ assets factored into the
equation. Students with sizeable savings
accounts in their name may end up
adversely affecting their financial aid
eligibility. A financial advisor and loan
expert can advise families on these
confusing financial facts.

529 COLLEGE COVERDELL EDUCATION UNIFORM GIFTS TO MINORS
SAVINGS PLAN SAVINGS ACCOUNT ACT ACCOUNT
A Special Advertising Section of The Morning Call
529 accounts are a Coverdell accounts are versatile in that These accounts are not traditionally
popular education savings they enable the money to be spent for designed for education but can be
plan. They operate in a elementary through college education, established to offer gift assets to minors.
similar fashion to IRA which is a larger range than other plans. The custodian of the account can sell
This is another tax-free plan when
and 401(k) plans in that used for school purposes. Coverdell the assets for the child’s benefit at any
savings for education are contributions are capped at $2,000 per time, and once the child reaches 18 or 21,
earned tax-free through year, and they’re only available to families recipients can use the funds in whatever
investment opportunities. below a specified income level, says the manner they choose. However, UGMA
SallieMae says 529 plans resource SavingforCollege.com. may affect financial aid eligibility.
are offered by states or
educational institutions CANADIAN EDUCATION
under Section 529 of the ROTH IRA SAVINGS GRANT
Internal Revenue Code.
These tax-advantaged Parents can open up a Roth IRA in their child’s With a CESG, parents can save for
plans generally have no Even though there are penalties to taking their child’s education by opening up a
| name once the child begins earning income.
Sunday, February 27, 2022 The usage of funds in 529 include purchasing a first home or qualified to a certain percentage and deposits it
income limitations and
Registered Education Savings Plan. The
earnings out before the age of 59.5, exceptions
high contribution limits.
government then matches the money up
education expenses. A Roth IRA isn’t subjected
accounts are subject to
into the child’s RESP. The extra funds the
to legal and administrative fees that can come
regulations.
government deposits are called the CESG.
with trusts, which are another savings avenue.
light on which products are best for families.
12 Parents can help finance their children’s educations through various savings plans. A financial advisor may shed more