529 College Savings Plans
Possible State Tax Credits + Tax Free Growth 529 plan contributions will grow tax-deferred, and withdrawals that are used for qualified educational expenses like tuition, fees, books, and even room and board are tax-free. Additionally, many states provide state tax deductions or credits for contributions to a 529 plan.
Learn more about 529s and UGMAs
Flexibility + Tax Advantaged Growth UGMA accounts are managed by the adult and become the child's asset at the age of majority, between 18 and 25 years old depending on the state. The gains and income within these accounts are first taxed at the child's rate and then the parent's, but the funds within these accounts can be used for a wide range of expenses, beyond just education - like for a home purchase, a business or continued investing. It’s important to keep in mind that since UGMA accounts are considered the child’s property, this can impact their eligibility for financial aid.
It is worth noting that a 529 plan’s value is factored into the Expected Family Contribution (EFC), which is used to determine financial aid eligibility.
