Your Child’s Future 101
Michael S. Wallman, Vice President / Financial Advisor
The Canseco Financial @ Raymond James Financial Services.
almost here, many high school seniors are eagerly anticipating the arrival of
college acceptance letters. And although this may be an exciting time for
teenagers anxious to start a new phase in their lives, it can generate concern
for many parents who aren’t financially prepared to help their children
finance a quality college education.
Don’t make the same
mistake. The many education incentives in the Economic Growth and Tax Relief
Reconciliation Act of 2001 can make planning for your children’s future more
attractive than ever.
From the perils of
freshman year to the challenges of senior thesis statements, your students will
need funds for everything from books and pens to food and shelter. The new tax
legislation offers many advantages that can help ease the financial planning
process necessary to finance four years of higher learning. The act includes
significant changes in rules governing both education savings accounts and 529
savings plans. Here’s what you need to know about these two popular ways to
save for your child’s or grandchild’s tuition nest egg.
For each child under age 18, the contribution limit for ESAs has been raised to
$2,000 annually, up from $500. Although contributions are not tax deductible,
the beauty of this account is that funds grow tax-free and are not taxable when
withdrawn, as long as the funds are used to pay tuition for private or
state-sponsored college, or for ancillary expenses like tutoring or computers.
What’s more, married
couples earning as much as $220,000 a year will now be able to open accounts.
Previously, the limit was $160,000.
529 savings plans
– College savings programs that combine tax benefits with professional
portfolio management, 529 plans are similar to ESAs because they now include
tax-free* qualified withdrawals, as long as the funds are used for higher
education. Some states offer state income tax deductions, as well.
The biggest change,
however, is in the portability of these accounts. Beginning this year, money can
be transferred tax-free from one qualified tuition program to another for the
same beneficiary. However, only one transfer may be made within any 12-month
The warm breezes of
spring bring an exciting time for your children. Help ensure they can achieve
their dreams by contacting me today to discuss how you can help plan for their
*This provision is subject to potential sunset revisions
on December 31, 2010. At that time Congress may change the tax-free withdrawal
status for qualified education expenses.
more information please call Michael @ 305-865-4300
may find Michael online with the Canseco Financial Group @ Raymond James
Financial Services at http://gayfinancialadvisors.com/Florida.htm