Education Planning 

We will help you craft a personalized education funding strategy for your child. This discussion will include the projection of education costs, assessing saving vehicles such as 529 or Coverdell plans and alternative allocations if a scholarship or change in education funding occurs. 

College savings questions

What is a 529 plan?

A 529 plan is a tax-advantaged education savings account. Earnings grow tax-deferred, and withdrawals are generally tax-free when used for qualified education expenses. Earnings withdrawn for other purposes are generally taxed and may face a 10% federal penalty, and 529 investments can lose value. Some states, including South Carolina, offer a state income tax deduction for contributions to their own plan. Before investing, consider the plan’s investment objectives, risks, charges and expenses, and whether your or the beneficiary’s home state offers tax or other benefits only available through its own plan. This and other information is in the plan’s offering statement, which should be read carefully.

What is the difference between a 529 plan and a Coverdell ESA?

Both can pay for education costs, but Coverdell accounts have a much lower annual contribution limit and income limits for contributors, while 529 plans generally allow much larger contributions. The rules on qualified expenses also differ, so the better fit depends on how much you plan to save and what you are saving for.

What happens to a 529 if my child does not go to college?

You generally have options. You can change the beneficiary to another eligible family member, keep the account for future education, or withdraw the money, with earnings taxed and possibly penalized. Under current law, some unused 529 money may be rolled into a Roth IRA for the beneficiary, subject to conditions including a lifetime limit and a 15-year account history.

Should I save for college or retirement first?

For many families, retirement savings come first, because students can borrow for education, while retirement generally has to be funded from your own savings. The right balance depends on your timeline, income and goals, so we look at both together.

These answers are general education, not individual tax, legal or investment advice. Your situation may differ, so please talk with us or a qualified professional before acting.

Balancing college and retirement

Paying for college should not cost you your own retirement. We look at education savings in the context of retirement planning, tax planning and your overall investment plan. Ask us to run the numbers. Want a head start? Try the college savings calculators on our planning resources page.