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Saving for Education
IQP Report with Andy Ortiz
Saving early for college is like planting a money tree—and compound interest is the magic!
Crunch Those Numbers:
Calculate the total amount you’ll need beyond tuition, like room and board, books, fees, and other related expenses. Do your best, educational costs have increased faster than the rate of inflation.
Investment Options 101:
529 Plans: Probably the most popular tax-advantaged savings plan for education-related savings. Recently expanded for use from K-12, payment of student loans, or a partial rollover to a Roth IRA. Contributions enjoy tax-free growth over time. But be careful. Stick to qualified expenses or face the IRA side-eye.
Coverdell ESAs: These enjoy similar tax advantages to a 529 plan, with a few key differences. Pros: You can invest in a wider range of investment vehicles, such as individual stocks, bonds, exchange-traded funds, and mutual funds. Cons: You’ll have annual contribution limits. High-income households may be excluded. And when the account beneficiary turns 30, you’ll have to take some actions.
Roth IRAs Retirement? Sure! But Roth IRAs can also moonlight as education savers, too.
If your child doesn’t go to college, gets a scholarship, or doesn’t need all the funds in the Roth IRA, the account can be kept open as a retirement vehicle. This gives families more flexibility with their savings while maximizing tax benefits.
So What's the Verdict?
Remember, education is an investment that lasts a lifetime! By following these steps or any combination thereof, you’ll be better prepared to support your child’s educational journey.
Financial questions?
Just ask Andy!
IQ Portfolios is an independent state-registered investment adviser firm. Always Fiduciary. Fee-Only.
800-558-7969
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* IQ Portfolios (IQP) is an independent State Registered Investment Adviser Firm located in Windermere, FL. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. A copy of IQP’s current written disclosure statement discussing IQP’s business operation, services, and fees is available upon request.
