MILWAUKEE, Aug. 19 /PRNewswire/ -- Parents should plan now for how they
will meet the rising costs of college, according to Sarah Henriksen, Director
of Education Planning at Strong Financial Corporation.
Henriksen suggests creating a financial plan to save for college and
suggests looking into 529 plans, Coverdell Education Savings Accounts, and
custodial accounts. (September is National College Savings Month.) She
recommends visiting http://www.Strong.com/college to learn about the types of
savings vehicles available, calculate how much families need to save, and find
out how financial aid can help.
"It's important for families to begin saving for college as early as
possible as tuition costs continue to climb," says Henriksen, whose company
offers a full range of college savings investment options.
"Education is the key to our information-based economy," says Henriksen.
"College graduates will earn $1 million more over their lifetime versus
someone with only a high school diploma, according to The College Board."
Henriksen says there are many savings options available to families; many
require as little as $250 to get started.
Section 529 Plans. These state-run, tax-advantaged plans allow any adult
to open an account and invest as much as $200,000, regardless of income level.
Account money can be used to pay for tuition, room and board, books, and fees
at schools nationwide. Earnings in 529 accounts are federal tax-free when
used for higher-education expenses. Plus, many states offer tax deductions on
contributions to their in-state plan.
Coverdell Education Savings Accounts (ESAs). Like 529 plans, ESAs offer
the potential for tax-free investment growth when used to pay for a child's
qualified higher-education expenses. They also can be used to pay for
elementary and secondary school expenses. "Because of the relatively low
annual contribution limit of $2,000 though, ESAs may not be enough on their
own to put a child through college. That's why some families use an ESA to
save for elementary to high school expenses and use a 529 plan for college
savings," says Henriksen.
Custodial Accounts. Uniform Gifts or Transfers to Minors Accounts are
other viable college savings options. These accounts allow you to invest
under a child's name with an adult as custodian. The funds from custodial
accounts can be used for items that benefit the child, including education
expenses. A portion of the earnings in a custodial account may be tax-free,
with the remainder taxable at either the child's or parent's tax rate.
Investment values fluctuate. Many federal tax attributes for 529 plans
will expire on December 31, 2010. Unless extended or modified by future
legislation, the earnings portion of a qualified distribution made after this
date will be taxable at the beneficiary's tax rate. Your state may offer a
529 plan with alternative advantages including potential state tax benefits.
Please consult your tax advisor. Strong Capital Management, Inc. is a
registered investment advisor. Securities are offered through Strong
Investments, Inc., an affiliated company. QS46098 08-04
SOURCE Strong Financial Corporation
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Related links:
http://www.Strong.com/college
CONTACT:
Drew Wineland of Strong Financial
Corporation, +1-800-368-9710
NOTE TO EDITORS: Henriksen is available for interviews. Headshot
is available
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