According to educationdata.org, total student loan debt has reached more than $1 trillion, and college costs continue to grow faster than inflation. Perhaps some level of education borrowing is inevitable in this environment, but the amount can be made more manageable if there is a pool of savings to be tapped.
Tax-preferred College Savings Choices
One of the best legacies parents can leave the world is well-educated children. The costs of that legacy continue to rise at an ever-increasing pace. Fortunately, there are tax-advantaged plans to give families a boost as they accumulate capital for meeting education expenses. With each plan, there’s no tax deduction for setting money aside, but taxes are deferred on earnings. Withdrawals used for qualified education expenses, such as tuition and books, are completely tax free.
529 College Savings Plans
529 Plans are offered by states and contributions can come from anyone (relatives and friends). A HBI Bank Investment Executive can:
- Guide you through the different plan options
- Determine the plan suited for you
- Before investing in a 529 plan, carefully consider whether you or your beneficiary's home state offers any state tax or other benefits available only from that state's 529 plan
Coverdell Education Savings Account Plans
Unlike 529 plans, these plans are owned by the child and can be used for qualifying education expenses including ones prior to college. Work with a HBI Bank Investment Executive to:
- Assess your risk with select investments in these plans
- Obtain guidance on different plans available to you
- Recommend investments that match your savings needs
UTMA/UGMA Plans
These plans vary from state to state and are subject to taxes each year. These accounts are in a child's name and the responsibility is on them to pay the taxes, though they are taxed at a lower rate. These are opened through a regular brokerage or mutual fund account. A HBI Bank Investment Executive can:
- Review which is best for you and your family
- Evaluate pros and cons of the account
Start Planning for College Today
Whether you're a new parent who has years to invest or a parent of a high school student whose investment time frame is very short, a sound strategy can help meet your needs. Don’t let doubt or uncertainty lead to indecision. Wondering which plan is right for your future scholar? Let us help you sort through your choices, and you can implement your planning with a sense of confidence. Read our tips on how to start paying for college.
To open up a college savings plan in Southern Wisconsin or Northern Illinois, contact our Wealth Management Team online or visit one of our convenient locations. FNBT has offices is Argyle, Beloit, Clinton, Darien, Delavan, Elkhorn, Janesville, Monroe, Walworth, and Williams Bay, WI and Rockton, Roscoe, and Winnebago, IL.
Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer's official statement and should be read carefully before investing. Investors should also consider whether the investor's or beneficiary's home state offers any state tax or other benefits available only from that state's 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investing in any state's 529 Plan.
Check the background of our investment professionals on FINRA's BrokerCheck.
Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Investments are:
• Not FDIC/NCUSIF insured
• May lose value
• Not financial institution guaranteed
• Not a deposit
• Not insured by any federal government agency
View Cetera Investment Services privacy policy, other important information and Business Continuity Plan.
This site is published for residents of the United States only. Registered Representatives of Cetera Investment Services LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Investment Services LLC site at www.ceterainvestmentservices.com Located at: 345 East Grand Ave, Beloit, WI 53512 608-496-8363
