Here are some options for your college funding:
U.S. Savings Bonds-For decades, Series EE ties have been symbolic of saving for college. Their safety, lack of sales charges, and support by the U.S. government are a few of the factors for savings bonds’ popularity.
Zero Coupon Bonds-Zero coupon bonds have become popular college funding devices and are well suited for other long-term financial needs such as retirement. Zero coupon bonds do not pay current interest but instead are sold at a deep discount to the face value. Investors gather the full face quantity upon maturity, which is typically several years down the road. A zero coupon bond generally generates a higher come back at adulthood than a Sequence EE savings bond of similar maturity.
Coverdell Education Savings Accounts-This consideration allows individuals with a modified adjusted income of up to $110,000 and married people processing mutually with up to $220,000 in modified adjusted income to contribute a maximum of $2,000 (non-deductible), per kid (under the age of 18), per year. Tax-free distributions may be used to pay for determining college expenses and may consist of primary and university expenses. Covered expenses consist of college tuition, charges, room and board, books, computer equipment, and clothing.
Roth IRAs-A Roth IRA allows you to contribute $5,000 a year in after-tax dollars this year. Efforts are subject to settlement and adjusted income boundaries. Catch-up contributions are also permitted for those aged 50 or older. Contributions to a Roth IRA grow tax postponed and are available on a first-in/first-out basis (meaning you get your own contributions back first, tax-free). Income is possibly income tax-free if the Roth IRA is held for more than five taxable years and distributions are made after age 59½, loss of life, impairment, or first-time home purchase ($10,000 lifetime limit).
College Pre-Payment Plans-With these programs, you can contribute funds to a specific college to pre-pay your kid’s expenses at that college. Certainly, the idea of paying for future college expenses has benefits, yet this type of plan does have some restrictions. For example, your kid may not want to go to that particular college, or he or she may not get approved by that university for educational factors.