• Skip to main content
  • Skip to header right navigation
  • Skip to site footer
Bautis Financial

Bautis Financial

Secure your Castle, Achieve your Dreams.

  • Schedule a Call
  • Podcasts
    • Agent of Wealth
    • Clear a Path
  • About
    • Our Approach
    • Our Team
    • Our Difference
  • Who We Work With
    • Individuals and Families
    • Small Business Owners
    • Retirees and Pre-Retirees
    • 401k Plan Sponsors
  • Insights
    • Blog
    • Business Valuation Advisor
    • College Planning Hub
    • Discover How
    • Learning Center
    • Risk Score
  • Client Access
    • Wealth Center
    • Orion

College Planning: Know the Rules for Education Funding

August 26, 2013 by Bautis Financial
How to Plan for College Funding

Read the latest rules on the most popular college savings programs, and get the answers to some frequently asked questions.

This is a segment of Bautis Financial’s college planning series, which includes webinars, podcast episodes, blog posts and downloadables to aid college-bound students and families in the admissions process. Visit our college planning hub for more valuable resources.

As college tuition continues to skyrocket, it’s becoming more important than ever to know how the various savings plans work. Here is a link to a handy reference that outlines the latest rules on the most popular college savings programs (529 plans, Coverdell savings accounts and the Education Savings Bond program) and how to use them to save money on your children’s education. In addition to details of each of the plans, the reference also contains information on Student loan availability and limits, Education tax credits and Student loan interest and tuition and fees deduction.

Whenever we have a discussion with a client about 529 plans and saving for their child’s college costs, we are almost always asked the same couple of questions.

What If My Child Doesn’t Go to College?

You have a couple of options if your child does not go to college. Another family member can use the funds for education. That can include another child, yourself, or even nieces and nephews. There is no time limit to use the funds, so you can also keep the money in the 529 plan and use it to finance your grandchildren’s education. Having the money compound tax free for 30+ years can generate a substantial amount of money. If you decide to take the money out of the account and not use it for education, you will have to pay tax and a 10% penalty on the earnings in the account.

What If My Child Receives a Scholarship?

You can withdraw money from a 529 up to the amount of the tax-free scholarship without paying the 10% penalty. You still have to pay income taxes on earnings, but contributions can always be withdrawn tax and penalty free. You still may be able to find some qualified expenses that you could use the 529 money for and avoid some of those taxes. In addition to tuition, you can use the money for tuition, room, board, books and mandatory fees there.

Should I Prioritize Saving for Retirement Or My Child’s Education?

Our advice, almost always, is to secure your retirement first. You or your child can borrow to pay for college, but you cannot take out a loan to finance your retirement.

Begin your journey of mastering the college admissions process with Bautis Financial. Whether you’re a parent or guardian, student or school counselor, book a free consultation to discuss how our financial advisors can be a college planning resource.

Category: Budgeting/Saving, Client Resources, Education, Lifestyle, Personal FinanceTag: 529 College Funds, college costs, Education Planning, Investments, savings
Previous Post: « What Is More Feared Than Death?
Next Post: How to Handle the New Medicare Tax The New Medicare Tax »

Sidebar

Featured Articles

bautisfinancial risk number

Recent Posts

How to Teach Your Children to Invest Like a Honeybee With Henry Svec

Episode 148 – How to Teach Your Children to Invest Like a Honeybee With Henry Svec

March 24, 2023 By Bautis Financial

Fed Hikes Rates by a Quarter Point and Indicates Increases May Be Nearing an End

Fed Hikes Rates by a Quarter Point and Indicates Increases May Be Nearing an End

March 23, 2023 By Bautis Financial

5 Questions to Ask Yourself 5 Years Before You Retire

5 Questions to Ask Yourself 5 Years Before You Retire

March 21, 2023 By Bautis Financial

Biden Vetos Retirement Investment Resolution

President Biden Issues First Veto of Presidency On Retirement Investment Resolution

March 21, 2023 By Bautis Financial

Stock Market Recap

Market Recap Week of 3/13/2023 Through 3/17/2023

March 20, 2023 By Bautis Financial

Blog Categories

  • Budgeting/Saving (36)
  • Business (53)
  • Clear A Path Podcast (6)
  • Client Resources (4)
  • College Planning Learning Center (2)
  • College Planning Podcast Series (3)
  • Daily Flash Briefing (1)
  • Education (33)
  • Estate Planning (16)
  • Finance News (584)
  • Insurance (27)
  • Investments (247)
  • Learning Center (25)
  • Lifestyle (52)
  • Miscellaneous (50)
  • Personal Finance (159)
  • Politics (21)
  • Real Estate (48)
  • Retirement Planning (104)
  • Social Security and Medicare (28)
  • Taxes (49)
  • The Agent of Wealth Podcast (147)
  • Uncategorized (109)
  • Videos (154)
  • Wealth Management (72)

Subscribe to Our Insights

Sign up to receive valuable financial insight and updates straight to your inbox each week.

Social

Follow along on social media

Contact

Bautis Financial
7 North Mountain Ave
Montclair, NJ 07042
Get directions
862-205-5800
Contact

Navigation

  • Schedule a Call
  • Podcasts
    • Agent of Wealth
    • Clear a Path
  • About
    • Our Approach
    • Our Team
    • Our Difference
  • Who We Work With
    • Individuals and Families
    • Small Business Owners
    • Retirees and Pre-Retirees
    • 401k Plan Sponsors
  • Insights
    • Blog
    • Business Valuation Advisor
    • College Planning Hub
    • Discover How
    • Learning Center
    • Risk Score
  • Client Access
    • Wealth Center
    • Orion

Copyright © 2023 · Bautis Financial · All Rights Reserved · Powered by Mai Theme

Return to top