Calling all comments! Does anyone have a college savings plan that they are satisfied with? The one I have for Matani is OK but I’m always looking for something better. Someone once told me about a plan where the money could be used for college and/or mission down the road but I haven’t been able to locate it. I’d love some input whether good or bad. Much thanks!
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Hey there! I’m Michelle; I’m an Passionate DIY’er and in constant pursuit of how to bring beauty to my house full of men (3 boys + 1 hubby). Stick around and see what I’ve got up my hard-working sleaves!
This is a loaded question with a multi-pronged answer…
There are SEVERAL options for college savings (or custodial accounts etc). The bottom line comes down to finding the correct financial organization to hold your money and offering the accounts you would be looking for… we might actually need to have this conversation in person (or over the phone)… but here is a good starting place for you to continue to research…
Here are some of the big tag words you will need to be familiar with:
1) UTMA or UGMA (they are custodial accounts and there are some differences between them and laws will differ between states as well.) here is a website to give a broad overview of these two types of savings accounts (I am assuming that these were the kind of accounts mentioned for mission AND education savings but you would have to look really careful at the laws of your state as to when these monies can be accessed. Sometimes a minor isn’t able to have access to the money until 21 years old… a little late for mission and undergrad college):
http://www.fairmark.com/custacct/
2) 529 accounts: college savings and college related expenses ONLY accounts. (There is some accommodations made for other non-college, trade school stuff but not missions etc.)
Check out this website for more info on 529 accounts:
http://www.sec.gov/investor/pubs/intro529.htm
3) Coverdale IRA accounts: These accounts can be used as college savings as well as used for elementary and secondary school expenses (which is a cool perk that the above accounts don’t offer) but not mission savings. The drawbacks are the limited amount of money you can contribute to these accounts and a lot of places don’t offer them or will even really understand what they are… but that is another story all together…
anyway here is another website to get some information about this type of saving account:
http://www.fairmark.com/college/saving/coverdell/index.htm
4) ROTH IRA accounts can be great saving tools as well and the money can be used for whatever you want. You contribute post-tax money to a ROTH and any interest earned is TAX FREE when you reach the legal “retirement” age. But you can always pull out whatever principle money you add to the account with no tax consequence. There are limits to how much you can contribute to this type of account and there are also income limits to even qualify to have this type of account.
5) Other taxable brokerage accounts can be a great place to have investments of many kinds (from stocks, bonds, cds, money markets, mutual funds, annuities etc.). These accounts are taxable and you do have to be accountable for taxes on monies generated from interest or dividend growth etc.
Call me later if you like and I would be happy to help answer your questions that you might have on the subject (or I can also reference my stock broker husband who knows better than me the answers to this question) 🙂