There are two types of tax-advantaged college savings plans designed to help parents finance education: 529 Plans and Education Savings Accounts (also known as ESAs or Coverdell accounts).
Both types of accounts offer tax-deferred growth. As long as the proceeds are used to finance qualified education expenses (like tuition, books, supplies, computers, and room and board), the money—including any gains and investment income—can be withdrawn tax-free. And unlike custodial accounts, both plans are considered to be your assets, not your child’s, which means their impact on financial aid is significantly reduced.
But there are some important differences in terms of eligibility and the amounts you can contribute, WMG Advisors can help you determine the best way to save for your family’s future education costs.
You want to help your kids pay for school, but you also need to keep your financial future intact at the same time. The key is to continue contributing to your retirement savings plan while using tax-advantaged college savings options.