College Savings Plans – 529, UTMA, UGMA
We all understand the important role college can play in helping our children realize their dreams. Some statistics show that college graduates earn 74% more than high school graduates. The college graduates also have higher job satisfaction and less likely will be unemployed. * Because education is one of the core values for many of my clients, as a part of their values based financial life planning, they choose to invest in their children’s education and accordingly implement collage saving accounts in their wealth building plans.
There are several tax-advantaged ways to save for key higher-education expenses, such as tuition, room and board, required books and supplies, computer equipment, etc. Some of these plans are 529 College Savings Plans and UTMA and UGMA accounts. Unlike 529 individual accounts, it is important to know that once UGMA and UTMA custodial accounts are setup they are considered “irrevocable gifts”. This means that you cannot take any assets back that have been contributed to this type of accounts. Once a child (the beneficiary) is of legal age, he or she can use the funds any way they want.
When deciding what plan is the best for your family in pursuing one of your most vital investing objectives, the following plan features should be considered:
Flexibility:
Who can open an account and income limits?
Start-up contribution, automatic monthly investment and account value limits
Use the assets to pay qualified expenses
Plan expenses and Investment Management:
Low and transparent expense structure
The proven investment management capabilities
Plan Assets Control:
Who retain control of the plan assets?
Change of beneficiary regulations and rules
Plans that can help with estate planning
Every college saving plan has a unique combination of benefits. Please feel free to contact me to learn more about their unique features and their most important differences. As always, it is my joy to serve and assist you in creating and implementing the financial plan that is the appropriate for your family’s unique situation.
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* Source: Georgetown University Center on Education and the Workforce (2011) and The College Board (2010)