If you have five years or more before your teen enters college, consider these savings
and investment plans:
An Education IRA (Coverdell Education Savings Account) can grow tax-deferred and
withdrawals are tax free for qualified distributions. There are contribution and
distribution limits.
- Section 529 College Savings
Plans 1, 2, 3
"529s" may be one of the best plans for the typical student. These accounts
allow a variety of contribution sizes and investments can grow tax-deferred. When
funds are withdrawn, growth is tax-free if used for qualified college expenses.
A mutual fund is a pool of investments managed professionally. When you buy shares
of a mutual fund, you effectively own a small portion of the fund's portfolio. Mutual
funds have different strategies and objectives including growth and income.
- Uniform Gifts to Minors
Act (UGMA)
This type of account can be set up for accumulating funds for a child's benefit
and may be used as they choose when they reach the age of majority in their state
(usually 18). Growth and earnings can frequently be taxed at a lower rate than the
custodian's (parents, guardians, grandparents, etc).
Securities offered through Farmers Financial Solutions, LLC,
30801 Agoura Rd. Bldg. 1, Agoura Hills, CA 91301, 818 584-0200