Page 31 - August 2020 - The Castle Pines Connection

The Next Chapter the culinary skills of Mark Henley Interesting Facts: Our New Dining Services Director Former Chef at the Brown Palace Hotel in Denver He moved to Colorado in 2003 after wearing a blindfold and hitting Colorado on a map! Lives in Littleton with his amazing wife and 3 children Well-known for his BBQ Ribs Fresh, scratch, comfort foods are his specialty Receive a bottle of Mark’s very own savory BBQ sauce upon move-in Reserve TODAY Independent Living Assisted Living Memory Care LegacyVillageCastlePines.com 303.663.9800 535 W. Castle Pines Pkwy, 80108 Corner of Monarch Blvd & Castle Pines Pkwy Investing in their future 31 By Bryan Goodland Paying for college can be a daunting task for any family. According to the National Center for Education Statistics, during the 2017/2018 academic year, undergraduate private nonpro t institutions cost an average of $46,014 per year, with undergraduate public institutions costing $17,797 per year. Of course, prestigious colleges can cost much more. Those costs can be intimidating, especially if there are several children in a household. Fortunately, grandparents can step in and make sure that the next generation receives the value of a quality education. So if you’re in the position to help your grandchildren, here are some safe ways to assist in paying for college. 529 Savings Plan – For many families, this is one of the most popular and convenient ways to invest for your child’s future. Grandparents can also take part in this investment vehicle. Grandparents can directly fund a 529 and the investment isn’t taxed. Yearly contributions are limited to $14,000 for individuals or $28,000 for married couples. Plus, withdrawals aren’t taxed either if they are used for quali ed expenses like education related costs. In some states like Colorado, contributions can also serve as deductions when ling your taxes. And if the parents already have a 529, you can contribute to that too. Coverdell Education Savings Account – Another option is investing in a Coverdell, although this account has some stipulations. Contributions are capped at $2,000 per year and there are income restrictions. One caveat to keep in mind is if a grandparent owns the account it will be seen as income for the child and a ect their nancial aid status. Pay Tuition to the College – If a grandparent pays the tuition directly to the college, there is no gift tax. This method can help with estate taxes as well, but may impact your grandchild’s nancial aid eligibility. Home Equity Line Of Credit – If the above options aren’t available, a line of credit is an option, although a far less desirable one. Interest rates can be high and there is a foreclosure risk when nancing a home. But if your circumstances warrant this kind of move, it is an option. Borrowing Against Retirement Accounts – A loan or withdrawal from a 401k is another possibility, but again, not as desirable as the other options. Taxes for early withdrawal can be signi cant and money away from your account can have long-term e ects on savings. Borrowing from a Roth IRA has similar downsides, but can be done if absolutely needed. Keep in mind that tax laws and rules surrounding nancial planning are always changing and it is important when making these choices to seek the most current information. There are a lot of options out there for grandparents to help out with college costs. Many of the choices depend on your current nancial status and what risks you are willing to take. And remember students can also apply for aid and leverage student loans, which grandparents can help pay o afterward. Look at your own situation, do the research and consult experts when you run into questions. Helping your grandchildren through college is a noble pursuit, but it shouldn’t put your own nancial stability at risk. Do you have a story idea for The Next Chapter? Send email to: Editor@CastlePinesConnection.com August 2020