College Savings

Just like there’s no “one right school” for every student, there’s no “one right way” to save up for education. Our financial planning team, who are registered representatives of Infinex Investments, can get you up to speed on three different strategies to save for college and help you find the plan that will set your scholar on a path to success.

The 529 Plan offers a flexible, efficient way to save for school. You can open a 529 for yourself, your child, or another beneficiary and put it toward education expenses at any level — K-12 (public or private), college, or graduate school.

When you save with a 529, you also enjoy hard-to-beat tax benefits. Use the money for its intended purpose and enjoy a pass on federal and, in many cases, state taxes.

With a low, one-time opening fee of $250, a 529 Plan is easy to start and effortless to manage — if needed, you can even change the beneficiary. Plus, anyone can contribute to this account along the way, either on a one-time or ongoing basis. Parents, grandparents, extended family, and friends — even the beneficiaries themselves can toss in some spare savings as they wish.

A Coverdell Education Savings Account (or Coverdell ESA) is a trust set up by an adult to pay for a minor’s education. Like a 529 plan, a Coverdell ESA helps pay for qualified education expenses, whether K-12 or college, for the designated beneficiary of the account.

A Coverdell ESA offers a few extra measures designed to make sure the money stays secure. When the ESA is established, the recipient must be either under the age of 18 or have special needs, the governing documents of the account must be in writing, and all contributions to the account must be made in cash. While there’s no limit to the number of accounts created for a specific student, the amount contributed on behalf of a beneficiary each year can't exceed $2,000.

The Uniform Gift to Minors Act (aka UGMA) established Custodial Accounts that allow minors to own their trusts without requiring an attorney to navigate trust documents or court appointments. Once a donor contributes to the trust, the funds belong to the beneficiary for good. A UGMA Custodial Account is made in the name of a single recipient so the funds can’t be transferred to another beneficiary.

If you want to set up a trust for non-liquid assets like real estate, fine art, or patents and royalties, the Uniform Transfer to Minors Act (UTMA), established Custodial Accounts just like the UGMA accounts, but for the property.

Until the trustee of either type of account reaches the age of trust termination, a custodian manages the account and the money included remains part of their taxable estate. Once an adult, the beneficiary receives full control of the assets in their trust and can use them for any purpose. The beneficiary can put the money toward education but may choose to use the funds differently than the donor or custodian intended.

* Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Fortera Wealth Management is a trade name of Fortera Credit Union. Infinex and Fortera Credit Union are not affiliated. Products and services made available through Infinex are not insured by NCUA or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including possible loss of value. For more information, please visit http://www.finra.org/ or http://www.sipc.org/.

Members should consult a tax advisor for additional tax information.