The cost of education continues to climb. If you have children, you may be concerned about how you can pay for their higher education. You can’t afford to overlook any options that may help you save. One savings tool that is frequently overlooked is the Education Savings Account (ESA).
Here are 15 things you need to know about ESAs.
1. You may establish an ESA with the custodian of your choice. The paperwork is very comparable to the paperwork required to establish an IRA.
2. Contributions to the account go toward the educational expenses of a designated beneficiary of a child under the age of 18. Contributions may be made for designated beneficiaries older than 18 if they have special needs.
For some time now, the cost of a college degree has been rising at perilously high rates, and as a result, the dream of one day going to college, for many, remains just that … a dream. With college tuition and associated costs rising so dramatically, it’s no surprise that people are looking for new and creative ways to save for these expenses. One such alternative method involves the use of a Roth IRA over more traditional college savings vehicles, such as 529 plans and Coverdell education savings account. That may sound bizarre. (A 529 Plan is an education savings plan operated by a state or educational institution.) After all, why would anyone use a retirement account to save for education expenses when there are accounts specifically designed to help plan for those costs? Nevertheless, here are three reasons why it may not be as crazy as you think.