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College Savings Plans Columbia SC | Modern Family Asset Management

College Savings Plans Columbia, SC

Plan Now for Your Child’s Future

Children grow fast. Between teaching them how to ride a bicycle and watching them graduate high school, you need to ensure that you’re doing enough to put them through college. The sooner you start saving for your child’s academic future, the better.

College Savings Plan Options

When planning a college fund, there are several account options to consider. These include:

529 Plan

A 529 plan is a tax-advantaged, state-sponsored college savings plan in the US. It offers flexibility to cover many academic costs tax-free, including those associated with college and even K-12 tuition expenses. Each state has its own unique 529 plan, and you are not limited to your home state’s plan.

The two main 529 account types are:

  • Savings plan. A standard tax-advantaged plan, similar to an IRA.
  • Prepaid tuition. A plan that pays a beneficiary’s college expenses in advance.


Education Savings Account (ESA) or Education IRA

An ESA or Education IRA is another savings plan that offers tax-deferred growth and tax-free withdrawals for covering qualified academic costs.

Main characteristics of an ESA:

  • Contribution limit. An ESA has a maximum annual contribution limit of $2000.
  • Timeframe. The savings must be used before the beneficiary turns 30 years old.
  • Income restrictions. There are some income limitations for eligibility.

UGMA & UTMA Accounts

The Uniform Gift to Minors Act (UGMA) and the Uniform Transfer to Minors Act (UTMA) are similar to custodial accounts that are handed over to the beneficiaries (the minors) when they come of age. These accounts are not entirely tax-free, as they are taxed at the child’s tax rate.

These accounts are often used as college savings tools. But the beneficiaries have the freedom to use the money as they like. Both accounts are very similar, with the key differences being:

  • UGMA can hold stocks, bonds, bank deposits, insurance policies, etc. (more liquid assets).
  • UTMA can hold almost any type of asset (even real-estate).

Standard Savings Account

A standard savings account can also be used for your child’s college expenses. These accounts grow with income earned through interest, and the money is highly liquid/easily accessible.

Discuss With A Financial Advisor

Choosing a college savings plan can be difficult, as there are so many options and factors to consider. The experienced financial advisors at Modern Family Asset Management can help you select a plan depending on your needs and circumstances. Contact us today for assistance with planning for your child’s future.

    Disclosure 1

    Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Consult with your tax advisor before investing. Before implementing any strategy mentioned, discuss with the appropriate advisor regarding potential limitations, taxation, and penalties. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

    Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Good Life Advisors, LLC, a registered investment advisor. Good Life Advisors, LLC and Modern Family Asset Management are separate entities from LPL Financial. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: SC, GA, MO, NC - powered by Enfold WordPress Theme