The federal tax filing deadline has arrived which means it’s refund time! Being that April is also Youth Month, we wanted to focus on ways your refund can benefit your child’s future.
According to a recent survey, the College Board reports a "moderate" budget for an in-state public college for the 2016–2017 academic year averaged $24,610. This number seems to grow larger every year so why not set your children up for success by investing in their education? Here are two of our college savings suggestions:
529 College Savings Plan
A college savings plan is a smart way to start saving for your child’s education. A 529 account functions much like a retirement account, but the recipient can only spend the money on expenses related to his or her education. Earnings accrue tax-free and tax-free withdrawals can be made for qualified education expenses. Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings. These plans are state-sponsored, so residents of any state can invest in their state’s 529 plans.
Coverdell Educational Savings Account (ESA)
The Coverdell ESA can be withdrawn tax-free for both K-12 and college-related qualifying educational expenses such as tutoring, tuition, books and home computers. A portion of the distributions is generally taxable to the beneficiary if the total distributions are more than the beneficiary's adjusted qualified education expenses for the year. There is a contribution limit of $2,000 per year - per child. The Coverdell ESA can be opened at Delta Community under the child's own account.
Delta Community Retirement & Investment Services has experienced
Financial Advisors who can talk with you about your child's financial future. It's never too early, or too late, to start saving.
Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. The investment products sold through LPL Financial are not insured Delta Community Credit Union deposits and are not NCUA insured. These products are not obligations of Delta Community Credit Union and are not endorsed, recommended or guaranteed by Delta Community Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. Delta Community Credit Union and Delta Community Retirement & Investment Services are not registered broker/dealers and are not affiliated with LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with your financial advisor prior to investing.
