College Planning Made Easy

College Planning Made Easy

These Investment Vehicles And Special Programs Will Help You Give Your Children The Education They Deserve

If you have young kids, it may seem like the day you drop them off at college is eons away. The truth is that this day, like so many other important milestones in your children’s lives, will be here before you know it. That is why college planning should begin as early as possible. The sooner you start investing in your children’s future, the easier it will be for you to give them the future that they deserve. The following investment vehicles and special programs will help you make the best investment for your children. This will likely be one of the most important investments you make for your family.

529 College Savings Plan

One of the best ways to invest in your children’s future is to put your money in a 529 College Savings Plan. This vehicle is a good fit for most parents, as it has many benefits, including the following:

  • Tax-Deferred and/or Tax-Free

  • Exempt from gift/estate taxes

  • No penalties for scholarships

  • Can help you avoid tuition inflation

One of the big advantages of a 529 College Savings Plan is that it may allow you to withdraw money without having to pay state/federal taxes, if the money is used for qualified higher education expenses (e.g. tuition, room/board, and books), and if the money is withdrawn at an eligible age. Typically, you can contribute to this plan without triggering estate or gift taxes--married couples, for example, can contribute up to $28,000 per dependent, per year without having to pay gift taxes. Another distinct advantage of this plan is that, if the beneficiary receives a scholarship, withdrawals (up to the amount of the scholarship) can be made without penalty. One thing to consider is that this plan may affect a student’s eligibility for financial aid.


There are two types of 529 Plans; “College Savings Plans” (as described above) and “Prepaid Tuition Plans.” Prepaid Tuition Plans allow you to make payments - either as a lump sum or in installments - at eligible colleges and universities. Since these payments are “locked-in” ahead of time, a Prepaid Tuition Plan Effectively allows you to avoid tuition inflation.

Roth IRAs

Many parents choose Roth IRAs as a means of investing in their children’s college education. Similar to 529 College Savings plans, money withdrawn at an eligible age would be exempt from taxes. As with the 529 Plans, financial aid may be affected. One of the major pros of using a Roth IRA as an investment toward college is that, if it turns out the funds aren’t needed, they can be used for your retirement. Of course, the flip side to that is that if the funds are needed, they will be deducted from your retirement savings.

Contact A Financial Advisor

When it comes to planning for your family’s future, one of your best resources is an experienced financial planner. Advisors like Mateo Garcia have been helping families realize their dreams for years. We recommend contacting an experienced advisor like Mateo Garcia before planning any next steps.



*This is not a recommendation. Recommendations are subject to a review of your financials.