| College Funding: It's never to early to get | | | | contribution in a single year is as much as |
| started with a tax free Savings Account! | | | | $200,000. With a Coverdell account, the |
| | | | maximum contribution amount each year is just |
| Each year the cost of college tuition and | | | | $2000, which is not much if you're getting a |
| other college expenses seems to increase in | | | | late start on college funding. However, with |
| excess of the overall cost of living. This | | | | a 529 plan, you must have a money manager, |
| makes it more and more difficult for you to | | | | and with a Coverdell fund, you're in control |
| fund your children's college education. The | | | | of the investments. Assets in a Coverdell |
| key to being able to put your children | | | | fund belong to the student, which can reduce |
| through college is starting a college fund | | | | the amount of financial aid a student can |
| early in your child's life, so that the money | | | | receive. However, money in a 529 plan belongs |
| has time to grow. A tax fee savings account | | | | to the account owner. If you set the account |
| for college may be the best way to go. | | | | up in the name of the parents, the amount in |
| | | | the account does not affect financial aid. |
| There are several types of tax free savings | | | | |
| accounts you can use for college. The most | | | | Finally - and this is a big one - money set |
| popular are 529 accounts. Money that you | | | | aside in a Coverdell account belongs to the |
| deposit into a 529 account is money you've | | | | student and is controlled by them once they |
| already been taxed on. However, you won't pay | | | | turn 21. They can spend the money to go to |
| taxes each year on the income the money in | | | | school, or spend the money for a trip to |
| the account earns. In addition, with a 529 | | | | Europe, or whatever they want. With a 529 |
| plan, you won't pay taxes on the money when | | | | plan, the contributor (meaning you, the |
| it's withdrawn, provided you use your | | | | parent) has control over the money. In |
| withdrawals only to pay for qualified college | | | | addition, with a 520 tax free savings |
| expenses, such as tuition, books, and room | | | | account, if Junior decides to forego the |
| and board. | | | | college education for that round the world |
| | | | trip, you can redirect his college funds to |
| There are other types of tax free savings | | | | his education minded younger sister. |
| accounts for college, including the Coverdell | | | | |
| Education Fund. This account works much like | | | | Only you can decide which type of college |
| a 529 tax free savings account for college, | | | | fund is best you and your child. The most |
| but there are some important differences. | | | | important thing is that you do something as |
| | | | early as possible-your children will grow up |
| First of all, with a 529 tax free savings | | | | before you know it-start your planning now. |
| account for college, your maximum | | | | |