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Beth A. Botti, CFP®, ChFC, CLU, CDFA™
Financial Consultant
California Insurance License #0G24537
612 Wheelers Farms Road, Milford, CT 06460
Phone: 203-877-6556 Ext. 169
Fax: 203-301-0736
Email: beth.botti@equitable.com
May/June 2020
Saving for College
Coverdell Education Savings Accounts (ESAs)* and 529 plans** can be key to helping lower the cost barrier to college for many students.
Coverdell ESA
If you qualify by income limits, you can contribute up to $2,000 annually to the Coverdell ESA for qualified education expenses for college, elementary and secondary schools. Contributions are not tax-deductible.The ESA’s beneficiary must be under the age of 18 or a special-needs student to qualify, and all money must be distributed when the beneficiary reaches age 30, unless the student has special needs. You can keep the money, however, by changing the beneficiary to another student under 30. Potential earnings are tax-deferred and distributions are income tax-free up to the amount of qualified education expenses incurred. You can’t make contributions, though, for beneficiaries once they reach 18.
529 Plan
If you’re looking to put more money away, check out a 529 plan. This plan lets you prepay for a specific institution or contribute to an account that pays for a student’s qualified education expenses at any postsecondary institution. States establish their own 529 savings plans, each with their own contribution limits (which can be high), while eligible educational institutions can establish prepaid plans.Potential earnings in a 529 plan grow tax-deferred and qualified distributions are tax-free. While contributions aren’t federally tax-deductible, some states may allow a deduction, and there are no income restrictions.
Anyone can contribute up to $15,000 per individual and $30,000 per married couple filing jointly per year to a 529 plan, free of federal gift tax. You can also bunch contributions into one year up to the maximum of $75,000, but then you can’t contribute anything else in the subsequent four years.
* https://www.irs.gov/pub/irs-pdf/p970.pdf
**Certain requirements may apply. Before investing, consider the investment objectives, risks, charges and expenses associated with 529 plans. Read the program offering statement before investing. 529 plans are not guaranteed by any state or federal agency. Consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 plan. Discuss 529 tax rules with your tax professional.
GE-2823645a(11/19) (Exp. 11/21)
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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.
GE-6572038.1 (4/24)(Exp. 4/26)
CFP®, and CERTIFIED FINANCIAL PLANNER™ are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.
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