Sterling Financial Planning, Inc.
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Types of Education

529 PLAN
  1. Also known as Qualified Tuition Program
    • Each State has its own program which may provide advantages and benefits exclusively for their residents and taxpayers
  2. Controlled by the Participant, not the Beneficiary
  3. Can change beneficiary to another family member
  4. Depending on the State plan, cumulative contributions limits can range from about $125,000 - $300,000
  5. Estate planning benefits

COVERDELL EDUCATION SAVINGS ACCOUNTS

  1. Formerly known as Educations IRAs
  2. For exclusive benefit of the beneficiary (i.e., minor child)
  3. Maximum 2008 contribution is $2,000 from all sources
  4. Contributions are subject to income phase out rules

UTMA / UGMA

  1. Custodial account until beneficiary reaches age of majority, then beneficiary has all rights to the account
  2. Income may be reported at child’s tax rate
  3. UGMA can hold securities such as mutual funds. UTMA can have other holdings such as real estate and fine arts