Page 7 - Gallagher Benefit Services - Financial Newsletter

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In addition to saving for retirement, many parents struggle with the daunting task of saving for their children’s college education. But just as with saving for retirement, it is important to start early. And with some research of your options and planning, you can make it less stressful.
Coverdell ESAs and 529 Plans
Coverdell Education Savings Accounts (ESAs) and 529 plans are two of the most popular options and o er many advantages over traditional savings accounts. The tax advantages are the same for both. Money is deposited on an after-tax basis but earnings and withdrawals are tax free. The money from both can be used for tuition, fees, books, supplies, equipment, special needs, and room
and board for minimum of half time students.
Coverdell ESAs can also be used for K-12 expenses while 529 money can only be used for higher education. Another major di erence is that the maximum annual contribution limit for Coverdell accounts is only $2,000 while maximums for 529 plans are typically much higher. Actual maximums
Financial Education Workshops
Planning For College
60-min. Workshop
Sept. 21-22 (@ many locations)
• 529 College Saving Plan
• Coverdell Educations Saving Account • Uniform Gift/Transfers to Minors Act • Individual Retirement Account
Look for your e-mail invitation!
are set by each 529 plan. Coverdell ESAs o er
a broad range of securities and certain other investments while 529 plan investment strategies are limited to those developed by the program.
For a more detailed summary and comparison of these two as well as other college savings options visit www.savingforcollege.com and click on the College Savings 101 from the menu of options on the left.
Financial Aid
As your child’s college years are approaching be sure to educate yourself about nancial aid sources including loans, grants, and scholarships. There are three basic factors colleges use to calculate how much need-based aid your child his eligible for – the cost of the school, the dollar amount of resources provided such as scholarships or gifts, and the expected family contribution. For more details and examples see the Financial Aid Eligibility section of www.savingforcollege.com.
2016 Financial Series September 7
FREE
Workshops for Employees & their spouses.