What are your options for funding a child or grandchild's college education?
Paying for a child's college education is an expensive proposition. But using an appropriate strategy, you can go a long way to meeting this goal, whether your child is young or already in high school. Establishing a plan as early as possible puts time on your side, but it is never too late to plan for the cost of your child's education.
However, simply opening a custodial accounts isn't always the optimal solution. For one, it potentially exposes you to the "kiddie tax," where investment income can be taxed at the contributor's (often higher) rate. Additionally, there are several tax-advantaged options specifically dedicated to education funding, which often fit better than a basic account.
Although subject to income and contribution limits, Coverdell accounts offer significant tax advantages and possible options to change the beneficiary (if necessary)
While your loved one is preparing to attend college, have you taken full advantage of all the levers available to incoming students, such as scholarships, financial aid, student loans, tax incentives, and pretax deductions?
