Although utilized on a lesser basis than 529 Plans, additional education planning and investing vehicles to consider include:

Taxable Savings

• Maintain ownership control
• Higher taxes

Uniform Gift (or Transfer) to Minors Act (UGMA OR UTMA) offers favorable tax advantages as part of your education planning and funding strategy when a brokerage account is established in a child’s name.

• Lower tax rate than investments made in parents’ name, however Kiddie Tax rules may apply
• Parents retain control over investments until the child turns 18 or 21
• Contributions can be made as desired subject to traditional gift tax rules
• Earnings are not restricted to education expenses

Irrevocable Trusts

• Can maintain control of assets for the lifetime of the beneficiaries
• Income over $11,000 subject to maximum individual tax rates
• Costly to establish and maintain

Traditional or Roth IRA Distribution

• IRA withdrawals may be taken without penalty if used to pay qualified higher education expenses
• Low contribution limits 

Coverdell Education Savings Account

• Formerly known as Education IRA 
• Account grows free of federal income taxes 
• May be able to coordinate the use of tax credits: Lifetime Learning Credit and HOPE Scholarship:

The above descriptions are an overview of the number of choices for education savings. For more information regarding all of our financial planning for education funding consulting services, please review our Education Planning section.