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.
- 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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