Potential tax advantages
Flexible investment choices
There are several ways to save for education costs, whether it’s for a child, grandchild, or yourself. Our CFS* Financial Advisors can assist you with choosing tax-advantaged solutions to help accumulate funds to pay for college.
Flexible and may be advantageous from a tax perspective.**
There are no income limitations for contributing to 529 Plans, and the maximum amounts that may be contributed per beneficiary are fairly high. Contributions are not tax-deductible, but the earnings are tax-free and withdrawals are exempt from federal income tax when used for qualifying expenses. Funds can be used only for higher education expenses, such as tuition, books, and room and board.
Ideal when saving for educational costs for elementary school, high school and college.**
Parents must meet eligibility requirements in order to use a CESA, and the amount which can be contributed on behalf of each beneficiary is limited to $2,000 per year. You can choose to invest funds in a CESA in many types of investments, such as stocks, bonds and mutual funds. Funds can be withdrawn on a tax-free basis for education-related costs such as computers, tutoring and private school tuition.
A way for minors to own assets, under direction of a custodian, which they normally would not be allowed to own.**
Also referred to as an UGMA (Uniform Gifts to Minors) or UTMA (Uniform Transfers to Minors) Account. Income, earnings and capital gains generated by assets in the account are taxable to the minor, which may provide the contributor with some tax advantages. Once the minor reaches the age of majority, he or she has control of all assets in the account and can choose how to spend them .
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* Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
** Note: There are risks to investing in a 529. Investments in the plan are not guaranteed, and not covered by FDIC or NCUA insurance. Your investments may be subject market risks. Always review the prospectus prior to investing.