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| won't pay taxes on the money when it's withdrawn, | | | | the contributor (meaning you, the parent) has control |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