Saving for College

Explore various tax-advantaged options for saving for college with our comprehensive guide. This resource covers custodial accounts, savings bond interest exclusions, Qualified Tuition Plans (QTPs), and Educational Savings Accounts (ESAs). It provides detailed information on the rules, benefits, and limitations of each option, helping families plan effectively for future education expenses.

Highlights:

• Custodial Accounts (UTMA/UGMA): Assets in these accounts belong to the minor and can be used for education expenses, with income taxed to the minor.

• Savings Bond Interest Exclusion: Interest from qualified savings bonds may be excluded from income if used for qualified education expenses, subject to income limits.

• Qualified Tuition Plans (QTPs): Also known as 529 plans, these plans allow tax-free growth and tax-free withdrawals for qualified education expenses, including tuition, fees, and room and board.

• Educational Savings Accounts (ESAs): Contributions to ESAs are not tax-deductible, but earnings grow tax-free, and distributions are tax-free when used for qualified education expenses.

• Qualified Expenses: Includes tuition, fees, books, supplies, and equipment required for enrollment, as well as room and board for students enrolled at least half-time.