Education Planning
Supporting a child’s or grandchild’s education can be one of the most rewarding aspects of success. It’s a way of building hope for the future and empowering the next generation. With rising inflation and the ever-increasing costs of education, it is best to begin your plans now. When you invest in education, you invest in a better future. Your actions provide the inspiration for a legacy of higher learning that could be passed on for generations to come.
WAYS TO CONTRIBUTE
We’ll work together to strategically select the investment strategy that is right for you and your student, keeping in mind that generous contribution limits do exist, regardless of income level.
A TAX-FREE SOLUTION
TO INVESTING IN EDUCATION
Funds you contribute to a 529 College Savings Plan have the ability to grow tax-deferred, and eventually be withdrawn, tax-free, provided you follow guidelines surrounding withdrawal and appropriate use. 529 plans also offer flexibility for your student, since funds can be used for anything from college expenses to accredited schools to tuition expenses for K-12. There are a few different ways we can build this strategy, so it’s best to meet to discuss your vision and see how we can help empower the student in your life.
A DIFFERENT WAY
TO INVEST IN A CHILD’S FUTURE
Although UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers To Minors Act) accounts are not designed specifically for college savings, they offer advantages including multiple investment options, limited tax benefits and the ability for a parent to transfer assets to a child without needing to establish a more costly trust. However, contributions to the accounts are irrevocable and parents lose control of the funds when the child becomes 18 – 21, depending on the state of residence. We help you navigate these considerations, providing solutions that allow you to support your student.
WORKING TO BUILD A TAILOR-MADE
EDUCATION PLAN
Education planning is one of the best gifts you can give to the next generations, and another way to secure your legacy and the ongoing success of you family and your loved ones. Your gift is making a meaningful impact on your student’s life. Our team will help you anticipate the needs of your student and build a plan accordingly. We will also continue to evaluate your plan as the years unfold.
Why is it important to strategize for education planning if I can pay for school out of pocket?
At Yarger Wealth Strategies, we do everything we can to optimize your wealth. The gift of paying for a child’s education is invaluable, and while paying for it out of pocket might seem the easiest, it also leaves you with the greatest tax liability.
Are there limits to how much I can give?
Unfortunately, yes. Our team will help you understand the parameters of your education plan and together, we can build a plan that will do the very best job of providing for the student in your family.
What other vehicles can I use to grow funds for my student's education?
When we first engage with you, we’ll make sure to have a strong understanding of your goals for your child’s education… we know how important it is for you to give them the very best tools possible to secure a bright future. Once we have leveraged the traditional tools for education planning, we can discuss additional investment options to help pay for your student’s education. While additional options may not be subject to the same tax benefits, we’ll do everything in our power to ensure your student has the tools and resources to succeed.
What if my student earns a scholarship?
When you invest in your student’s future, we must look at all possibilities. From the outset, we’ll make sure we have a plan in place if your student does not end up using or needing the funds in the case of scholarship. In the case of 529 plans, you can either use the funds to provide additional support for other qualified education expenses, or you can withdraw and use the money in other ways. You won’t be subject to penalty if you withdraw from a 529 plan because your student has earned a scholarship. You are able to withdraw on a dollar for dollar basis equal to the amount of the scholarship. However, since any growth on your investment has been tax-free, the investment gain attributable to any amount withdrawn will be subject to ordinary income tax. Further, you can rollover funds into a different 529 plan for another student if you so choose.
For UGMA/UTMA, your student becomes a direct owner of those funds at the age of maturity (anywhere from 18-21 depending on your state), and they can use the funds for non-school related expenses as they please.