Many people establish irrevocable family trusts to fund their children’s college tuition and expenses, but the possibility of higher tax rates in 2013 may make this year an opportune time to consider designating a portion of those trust assets to own a 529 college savings plan. Irrevocable trusts are generally not tax efficient entities since
Borrowing money remains a significant part of most students’ plans for paying for college. According to Pew Research Center, 60% of all graduates in 2008 had borrowed money for school, compared with 52% in 1996. Considering this trend, it’s likely that taking out a loan will be part of the discussion when planning for college.
While several tax provisions set to expire this year are putting pressure on college savings, there are no legislative changes currently proposed that would impact 529 savings plans. If Congress does not act, the contribution limits for Coverdell education saving accounts will be reduced after December 31, 2012. The current maximum contribution is $2,000 per
Generally, owners of certain government savings bonds have to pay taxes on interest — either in the year the interest was earned or when the bond is redeemed. Certain bond owners may be able to avoid taxes on all or a portion of the bond interest payments if the proceeds are designated for qualified education
While the recent stock market has undoubtedly challenged client nerves, it can present attractive financial planning opportunities for certain savvy clients. Consider the following: Converting to a Roth IRA With many IRA account values lower, it may be a great time to consider a Roth IRA conversion. The lower the value of the Traditional IRA
Before 529 programs became prevalent as an attractive vehicle for funding college education, many families utilized traditional custodial accounts (UTMA or UGMA). A primary benefit of these accounts is that, up to certain limits, any income generated from these accounts is not taxed or only taxed at the child’s tax rate instead of the parent’s
With the estate tax reinstated by the 2010 federal tax law, now may be an opportune time to review estate tax strategies with clients. The current tax rate is in place only until the end of 2012, and after that, estate tax rates could rise. As Congress increasingly focuses on the national debt, rising income
If some of your clients are not among the 10 million 529 plan account holders nationally, it may be a good time to talk to them about changes to the program proposed in Washington, D.C., that could make these plans even more attractive. Clients who are already saving with a 529 plan will also be
Each year, churches, schools, hospitals, and civic groups award scholarships to local students. Helping these organizations establish a 529 account as the funding vehicle can be a great way to build business relationships in your community. Here are some reasons why this can be a better alternative for local non-profit organizations, which will typically hold
Several tax credits for investors saving for college were extended for two years in the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The contribution limit for the Coverdell Education Savings Account program, which was scheduled to revert to $500, was maintained at $2,000 and extended through 2012. Depending