Saving for Education Are you planning to help your children or grandchildren with their education expenses? At BNCWP we are here to help you determine how much you'll need to save based on your priorities and situation. College savings plan options: Custodial Accounts (UGMA & UTMA) This option allows you to make an irrevocable gift to a minor to an account that your child ultimately controls when he or she turns 18 or 21 (depending on state law). He or she can use the funds for tuition and other expenses, but the dollars do not have to be used for education. 529 college savings plans 529 plans are generally sponsored by states, state agencies or educational institutions for qualified kindergarten through 12th grade, private school and college tuition and expenses. These investment plans stay under your control and may offer certain tax and contribution advantages.1 Coverdell Education Savings Account (CESA) You can contribute to this investment account only until children turn 18 unless the child is a special needs beneficiary. This type of account can be used for elementary, secondary and college expenses and tuition. It may include tax benefits but has a maximum contribution limit of $2,000 per year. Traditional/Roth IRAs Penalty-free distributions are allowed from IRAs for eligible educational expenses for you, your children and your grandchildren. IRAs are not counted as assets for financial aid calculations, but withdrawals are considered financial aid income for parents (income taxes may apply to IRA and Roth IRA withdrawals). 2 If saving for college is an important financial goal for your family, let's talk about how you start a college plan for your children, grandchildren or even yourself. Try our College Calculator to estimate your savings needs. Then we will show you how to address them. 1, 2 LPL Financial, Stratos Wealth Partners and Boreman Norton Cook Wealth Partners do not provide tax advice. Clients should consult with their personal tax advisors regarding their personal situation. Have a Question Name Email Address Phone Question Thank you! Oops!