College Preparation And Savings | Numerico | CPA Livonia, MI
College preparation can be an exciting time for parents and students, as college holds a wealth of impactful information and experiences. However, while it may be tempting to focus on the more exciting aspects of college preparation, financial planning is just as crucial. Fortunately, with the help of financial planning, you can advance your education safely and affordably.
At Numerico, we provide consultation services for parents and students to help them effectively plan their financial futures. If you’re interested in hiring an accountant to help plan the funding for your education, our expert team can walk you through the available options.
Coverdell Education Savings Account
A savings account or educational trust is an excellent way to begin college preparation for your child without placing excessive pressure on yourself. These accounts allow you to safely set money aside for a college education while also providing valuable tax benefits. It pays to start planning as early as possible.
One option for a custodial account is the Coverdell Education Savings account. This account allows parents and other family members to contribute up to $2,000 per year into a protected account that students can use for educational expenses. This low limit leads many families to pair Coverdell accounts with other options.
With a Coverdell account, withdrawals for education expenses are tax-free. Parents can also use Coverdell funds to cover certain K-12 costs, which is a significant benefit. The accounts in the following sections do not offer this benefit, so consider this factor if it is a priority.
Section 529 College Savings Account
Another option for parents seeking to set up an education fund for their children is a Section 529 Savings Account. Also known as Qualified Tuition Programs, state governments establish these programs to enable parents to plan for their children’s futures more effectively. As they offer valuable tax benefits and limitless deposits, these accounts are an excellent option.
With a 529 account, family members can make unlimited deposits into the account, usually with tax deductions up to a specific dollar amount. These deductions can make it significantly easier to make room in your budget for these investments. While determining the most cost-effective tax strategy can be challenging, our experts can help you save the maximum amount.
Overall, Section 529 accounts are a valuable asset for parents and family members of aspiring students. By allowing the money to grow and compound tax-free, these accounts grant impressive flexibility and enable families to save an impactful sum of money.
Section 529 Prepaid Tuition Plan
Education costs are continually rising, which causes significant stress for many parents struggling to budget for their children’s college expenses. Fortunately, with a Section 529 Prepaid Tuition Plan, you can protect yourself from inflation and give yourself a definitive cost right from the outset.
These plans allow you to pay current tuition costs for your children’s education, even if that is still years away. By locking in the price at the time the plan begins, these plans protect families from future tuition and fee increases. A prepaid plan is an excellent overall option because it provides outstanding value and saves significant money over time.
Other Taxable Investment Accounts | Financial Aid
Parents can also use standard taxable investment accounts to save money for their children’s education. While these accounts do not offer the same benefits as the options discussed above, they still allow families to set aside and grow funds over time. Generally, the success of these accounts depends on the financial advice you follow, so finding an experienced management company is essential.
While the government determines the amount of financial aid each student receives, parents can use financial strategies to improve their chances. The final year of high school is the most financially impactful, so minimizing the income you report can substantially raise the value of grants and scholarships your child may receive.
Numerico | Your College Preparation and Saving Experts | Livonia, MI
If you’re a student or parent seeking a CPA in Livonia, MI, the team at Numerico can help with every step of preparing for college. Our team is passionate about helping our clients build for the future and can help you find the best option for you and your family. We’re experts in college preparation, so contact Numerico at (313) 278-8030 for a professional accountant near me.