Where to Save Your Child’s College Fund

There are several options to choose from to save for college. Each option will have its pros and cons. There are the state-sponsored accounts which you risk possible fees and penalties for some withdraws. Prepaid Tuition Plans offer you the ability to prepay for college with stipulations. An ESA is tax-free as long as you meet income guidelines. Custodial Accounts let your child have accounts in their name if FAFSA is not your plan. Roth IRAs are an option but one you should research carefully. Research the pros and cons to make the right decision.

Key Takeaways:

  • Depending on the type of account you use, you can score some good tax advantages on top of your savings.
  • state-sponsored account is available to anyone, regardless of income levels
  • Unqualified withdrawals are taxed and hit with a 10% penalty fee.

“Working with a financial adviser can help ensure that you pick the right type of account or combination of accounts to maximize your tax advantages, growth potential and the likeliness that you’ll be able to achieve this important financial goal.”


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This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.