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Tips For Starting A College Fund For Your Child

January 2, 2020 by Hailey Harris Leave a Comment

We all know that college costs are only rising with each passing year. So when you have a child, starting a college fund for your child is an important concern. For some of us, this can be an overwhelming task. To help, we have tips for starting a college fund for your child. These tips should make it easier!

College is expensive, but most parents really hope that their children will go to college and get a degree. Unfortunately, a mistake often made is not planning how to pay for it until it is too late. So, we want to help you. Keep reading to learn about how to start a college fund for your child. #collegefund #saveforcollege #collegesavingsfund

Contents
1 Starting A College Fund For Your Child
1.1 Coverdell Education Savings Account
1.2 529 Savings Plan
1.3 IRA
1.4 Final Considerations When Starting a College Fund

Starting A College Fund For Your Child

There are a few effective options for starting a college fund for your child. Following is a short explanation of each.

Coverdell Education Savings Account

An education savings account is an investment account that is set aside for educational expenses. Distributions that you take from this account are tax-free. Be aware that there is a $2000 limit on yearly contributions, per beneficiary.

When you have a kid, one of the most important thing you can do is starting a college fund. Here are the best tips to help you do that.

529 Savings Plan

A 529 savings plan is a state-sponsored savings plan for educational expenses. Funds for this plan are eligible for any tuition expenses from Kindergarten through 12th grade, as well as for colleges in any state. Withdrawals used for education expenses are tax-free.

There are two kinds of 529 savings plans. One type is a prepaid plan, in which you prepay for college tuition credits at today’s prices. The other is investment savings. Your deposits are invested, and your money then grows along with the value of the investment. There is no limit to annual contributions!

When you have a kid, one of the most important thing you can do is starting a college fund. Here are some tips to help you start saving.

IRA

Surprisingly, an IRA {Individual Retirement Account} also works well for starting a college fund. One advantage of using an IRA for a college fund is that IRAs don’t count against you in financial aid calculations. This means that the money in an IRA won’t automatically reduce the amount of federal financial aid your child may receive. However, you will be subject to federal and state income taxes on your full IRA withdrawals.

When you have a kid, one of the most important thing you can do is starting a college fund. Here are some tips to help you start saving for their college fund.

Final Considerations When Starting a College Fund

For most people, the 529 savings plan is the best way to go when considering a college fund for your child. It has the best tax advantages, and the highest limits on your annual contributions.

Filed Under: Money, Save Money Tagged With: college, college fund, college savings, college savings plans, college tuition, kid stuff, Money, money wise, Parenting, Savings, starting a college fund, tuition

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