What is better than saving for your kids education. One of the best 529 Plans,Ohio College advantage program is offering added bonus for new accounts.
* Refer a friend and earn $50, if you already have an account. Your friends will earn $25 for opening an account.
* Systematic savings incentive, earn $25 when you sign up for recurring EFT or payroll deduction.
Offer ends Jan, 31st 2010.
If you are interested in opening 529 account with ohio college advantage program, Please leave a comment with your email and I will refer you.
About College Advantage: This plan is offered by OHIO and open to residents of all states. They have one of the best selections of low cost active funds to invest along with CDs and vanguard index funds.
Showing posts with label Education. Show all posts
Showing posts with label Education. Show all posts
How much should you save for your babies college education? I personally have never been sure about how much money will we need for our kids education. Random savings in 529 and Coverdell do help, however savings with a right plan does go a long mile.
You may be wondering how much you will need to contribute each month in order to meet the projected costs. While it is impossible to predict, many investors have found the Upromise College Savings Calculator very helpful in education planning of our little ones. "UPromise: How much to save."
You may be wondering how much you will need to contribute each month in order to meet the projected costs. While it is impossible to predict, many investors have found the Upromise College Savings Calculator very helpful in education planning of our little ones. "UPromise: How much to save."
Coverdell Annual Contribution Limit: $2000
You may contribute up to $2,000 annually to a child's Coverdell ESA if your modified adjusted gross income MAGI is less than $95,000 as a single tax filer (or married filing separate), or $190,000 as a married couple filing jointly. The $2,000 maximum contribution limit is gradually reduced if your MAGI exceeds these limits.
All funds in the account must be distributed to the beneficiary within 30 days after his or her 30th B'day. If the assets in Coverdell account cannot be used by the designated beneficiary when he or she turns 30, then the funds in the account can be roll over to a another designated beneficiary who is qualified family member.
If the distribution exceeds qualified education expenses, a portion will be taxable to the beneficiary and will usually be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship. Hope and life time learning credits can be taken in the same year when tax free qualified distribution is taken from the plan.
Unless Congress acts, some Coverdell benefits expire after 2010.
You may contribute up to $2,000 annually to a child's Coverdell ESA if your modified adjusted gross income MAGI is less than $95,000 as a single tax filer (or married filing separate), or $190,000 as a married couple filing jointly. The $2,000 maximum contribution limit is gradually reduced if your MAGI exceeds these limits.
All funds in the account must be distributed to the beneficiary within 30 days after his or her 30th B'day. If the assets in Coverdell account cannot be used by the designated beneficiary when he or she turns 30, then the funds in the account can be roll over to a another designated beneficiary who is qualified family member.
If the distribution exceeds qualified education expenses, a portion will be taxable to the beneficiary and will usually be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship. Hope and life time learning credits can be taken in the same year when tax free qualified distribution is taken from the plan.
Unless Congress acts, some Coverdell benefits expire after 2010.
- K -12 expenses will no longer qualify.
- With annual contribution limit reduce to $500 from $2000.
- Withdrawals will not be tax-free in any year in which a Hope credit or Lifetime credit or Lifetime Learning credit is claimed for the beneficiary.
However as Coverdell can be roll over to any 529 Plans without any tax consequences, potential sunset of Coverdell doesn't look bad.
I-Bonds: I Bonds which are sold at face value and issued in either paper or electronic form, offers an alternative and more safer investment for future college tution. If used for college education, interest income is exempt from federal income tax. However there is no restriction on mandatory withdrawal for education etc. They can be purchased directly from treasury direct www.savingsbond.gov
Education cost is spiralling, not sure if I Bond can catch up. Probably equity is still better options for parent whose kids are still atleast 10 years away from college.
Coverdell Education Savings Account also called Coverdell IRA is used as a tax advantage investment vehicle for a child. Just like 529 plans, money can be taken out of these IRA without any tax implications if they are used for qualified educational expense. Biggest difference with 529 Plan is that, Coverdell can be used for primary and secondary education. They seem to offer more flexibility around investment choices, but with much less allowed annual contribution limit.
Mantra "Pay yourself first" is great for education savings. Automatic contribution depending upon how much one can contribute will certainly help in shaping a kid's future. Talk to your financial advisor for asset allocation and understand your risk tolerance, you don't want to lose money in a stock market meltdown when your kid is just few years away from college.
Link to IRS web site explaining in detail about coverdell IRA: http://www.irs.gov/publications/p970/ch07.html
Here is a sample list of Coverdell ESA custodian with fee and contribution limits. I've opened a Coverdell ESA in Schwab, due to low fee and better investment choices.
Source : http://SavingForCollege.com
ESA Sponsor | Custodian | Account Fee | Minimum Contribution | Account Type |
|---|---|---|---|---|
| Gabelli Funds | State Street Bank and Trust | None | None | Mutual Funds |
| Madison Mosaic Funds | U.S. Bank NA | Waived with automatic contributions (otherwise $12.50 - $25) | $100 per month with auto contribution | Mutual Funds |
| Mairs and Power Funds | U.S. Bank N.A. | None | $1,000 | Mutual Funds |
| Janus | State Street Bank and Trust | None | $1000, or $500 with a $100/mo automatic contribution | Mutual Funds |
| Oakmark Funds | State Street Bank and Trust | $5 installation and $7/year | $500 per fund | Mutual Funds |
| TIAA-CREF | State Street Bank and Trust | None | $2,000 | Mutual Funds |
| T. Rowe Price | T. Rowe Price Trust Company | $10/year, waived with $5,000 balance | $1,000 per fund, or $50/mo. automatic contributions | Mutual Funds |
| Vanguard | Vanguard Fiduciary Trust Company | $20 annually, waived with electronic access and delivery, and $25/fund fee for redemption within 3 years | $2,000, or $1,000 in the Vanguard STAR Fund | Mutual Funds |
| E*Trade | Not Determined | None if electing online statements | $1,000 | Discount Brokerage |
| Scottrade | Scottrade, Inc. | None | $500 | Discount Brokerage |
| TD Ameritrade | Ameritrade, Inc. | None | $1,000 | Discount Brokerage |
| Charles Schwab & Co. | Charles Schwab & Co. Inc. | None ($20 if account balance is below $2,000) | $2,000 | Discount Brokerage |
Best College Savings Plan
- Ohio CollegeAdvantage.
- Indiana CollegeChoice 529 Direct Savings Plan.
- Utah Educational Savings Plan Trust.
- Virginia Education Savings Trust.
- Virginia College America 529 Savings Plan.
Worst College Savings Plan
- Nebraska State Farm College Savings Plan.
- New Jersey Best 529 College Savings Plan.
- Montana Pacific Life Funds 529 College Savings Plan.
- Ohio Putnam CollegeAdvantage.
- Nebraska AIM College Savings Plan.
Couple of testimonials for Top rated Ohio 529 Plan
Morningstar rates Ohio's 529 plan as "Top 5" college savings plan in the nation
Morningstar Inc., a leading provider of independent investment research, has named Ohio’s CollegeAdvantage 529 direct plan as one of the top five college savings plans in the nation in a report that was released April 23, 2009. In reviewing the Ohio direct plan Morningstar stated that “the strong investment options, low costs, and good flexibility make this plan tough to beat for Ohio residents.”
Morningstar Inc., a leading provider of independent investment research, has named Ohio’s CollegeAdvantage 529 direct plan as one of the top five college savings plans in the nation in a report that was released April 23, 2009. In reviewing the Ohio direct plan Morningstar stated that “the strong investment options, low costs, and good flexibility make this plan tough to beat for Ohio residents.”
The Wall Street Journal praises Ohio's bank options
Ohio's 529 bank options were recently noted in the Wall Street Journal's "The Intellegent Investor" column written by Jason Zwieg on March 20, 2009. Zwieg mentions Ohio bank options in the column: "For young children, consider the remarkable deal offered by Ohio's 529; Federally insured certificates of deposit from Fifth Third Bancorp with maturities of up to 12 years at yields as high as 5%. But it is tough to beat a risk-free 5% return exempt from federal income tax. What a tragedy that more states didn't offer similar options before it was too late."
Ohio's 529 bank options were recently noted in the Wall Street Journal's "The Intellegent Investor" column written by Jason Zwieg on March 20, 2009. Zwieg mentions Ohio bank options in the column: "For young children, consider the remarkable deal offered by Ohio's 529; Federally insured certificates of deposit from Fifth Third Bancorp with maturities of up to 12 years at yields as high as 5%. But it is tough to beat a risk-free 5% return exempt from federal income tax. What a tragedy that more states didn't offer similar options before it was too late."
Based on 2009 Morningstar report, this is highest rated 529 program. Ohio College advantage program is open to all the resident of US.
- Go to Ohio CollegeAdvantage and open an account;
- During the application, use reference code 2478738 in order to receive the bonus;
- Fund the account with at least $25 to qualify for the bonus;
- Receive the bonus in 7 t0 10 business days;
- Use the $25 bonus you just earned to start saving right away;
- Refer your colleagues and friends to CollegeAdvantage plan and earn more bonuses (up to $500) and save more for college
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