Paying for College
Saving for a college education may seem intimidating, but the correct savings plan and tax incentives can provide affordable financial planning for college.
Paying for College
Saving for a college education may seem intimidating, but the correct savings plan and tax incentives can provide affordable financial planning for college.
The financial advisors at Dreggors, Rigsby & Teal, P.A. can discuss the many options beyond scholarships, financial aid, personal income/savings and loans. We can assist you with discovering savings plans specifically designed for college planning, providing tax-free earnings for qualified higher education expenses, such as tuition, room and board. In selecting a suitable savings plan, it is important to define your goals and needs in regards to protecting your family’s financial security.
Which option is right for you?
529 College Savings Plan
- Professionals manage the funds in your plan
- You maintain control of the investment according to your individual investment goals, risk tolerance and time horizon
- No income limits on participation
- You have the option to transfer a maximum of five years’ worth of annual gift exclusions in one calendar year.
Coverdell Education Savings Accounts
- Allows for an annual non-deductible of up to $2,000 into a trusted account without federal income tax
- If the account is used for qualified higher education expenses (room and board), the earnings will be tax free
- This plan may have income limitations.
Education Credits (American Opportunity Credit)
- Allows for a $2,500 tax credit for the first four years of college expenses for students enrolled in a degree program, who have taken at least one-half of the normal full-time workload during the year
- Covers tuition, fees, books, supplies, and equipment needed for higher education
- Does not cover room and board expenses.
Lifetime Learning Credit
- Covers 20% of the first $10,000 in expenses without restraints of enrollment level
- This plan has a more narrow income limit, with credits phased out for higher income taxpayers.
The Gift of the Future
- Placing money and/or property in a child’s name made either to a custodian or to a trust to be gifted to the beneficiary at the age of 18 or 21, depending upon state law.
- This plan comes with many legal concerns, could limit financial aid eligibility, and should be carefully considered for possible outcomes.
- Each alternative saving plan works in regard to federal regulations and state policies. Contact us today to begin planning your financial future for securing a college education. Contact us for more details.