Education Funding

Like any goal, the sooner you start saving for a child or grandchild’s education, the easier it is to achieve. But even if tuition bills are closer on the horizon than you care to admit, there are ways to catch-up and help the next generation finance their dreams.

Have a child or grandchild saddled with student debt? There are gifting strategies that can help you pay it down, while also allowing you to remove assets from your taxable estate.

Things to consider

Helping to pay for a grandchild’s education allows you to impart your financial values and learning, and provide a smart way to transfer wealth without having to pay gift and estate taxes.

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Time your 529 Plan distributions

Consider delaying distributions from 529 Plan accounts owned by grandparents so they don’t count as income and reduce aid eligibility.

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Reduce your taxable estate

Under the IRS five-year gift rule, you can contribute up to $90,000 ($180,000 per couple) toward each 529 plan without incurring gift taxes.

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Make direct tuition payments

Payments made directly to a K-12 school or university for a grandchild’s tuition is not considered a taxable gift.

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Retain control of your gift

As the owner of a 529 Plan account, you retain control of the assets and can change the account beneficiary if a child decides to forego college.

What to ask your Financial Advisor

  • What options do I have to save/invest for my grandchild’s education?
  • How do 529 Plans work and how are the savings and distributions taxed?
  • Will money that I save in a 529 Plan account impact my grandchild’s eligibility for financial aid?
  • How much can I contribute before triggering gift or generation-skipping transfer taxes?

 

 

 

 

Explore our Education Savings calculator, available in Online Access



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