College Savings Accounts

 college expenses

Simple Alternatives for College Expenses

Start putting money aside for future college costs today with help from The Summit Retirement & Investment Services.

One of our professionals can help you plan and save for a child’s future educational needs.

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Coverdell Savings Account

A “Coverdell ESA” or “education savings account” are tax-advantaged investment accounts for future education expenses. In addition to higher education expenses such as tuition and fees, qualified expenses include elementary and secondary education.

If you are eligible, you can make contributions up to $2,000 per year to a Coverdell Savings Account (formerly referred to as an Education IRA). Your money grows tax deferred, and any withdrawals you make to pay qualified education expenses are exempt from federal taxes. Qualified education expenses must be used at eligible educational institutions, and include:

college tuition

College Tuition

room & board expenses

Certain Room and Board Expenses

textbooks

Books

college equipment

Equipment

services

Services

supplies

Supplies

529 College Savings Program

529 plans, or “qualified tuition plans,” are tax-advantaged savings accounts for future college tuition and related costs. Eligible expenses, such as tuition, books, computers, room and board, vary with each type of plan. The two types of 529 plans are pre-paid tuition plans and college savings plans.

All states sponsor tax-advantaged 529 college savings programs to help families save for future college costs. In general, college savings programs don’t have any income-based eligibility limitations. There are two main types of 529 plans (each state’s plan has its own distinct terms and features):

  • Prepaid Tuition Plans allow you to pay tuition in advance and lock in the cost based on today’s tuition prices. These plans pool investments and aim to keep pace with tuition increases in your state.
  • College Savings Plans let you save money in a special college savings account for tuition and fees, books and supplies, and certain room and board expenses.

These plans provide variable rates of return based on the investments you choose from the available options.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

Contact The Summit Retirement & Investment Services

We’re here to help – please fill out the form with the best way to reach you; or if you prefer, contact us by phone at (800) 836-7328 extension 7230.

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