Big Dreams, Smart Education Savings: Choose Where and How to Save for Your Children’s Education
5 Key Takeaways
1. Choose the right savings account for your child's future.
Trump Accounts, UTMA/UGMA accounts, Roth IRAs, and 529 plans each offer different benefits and restrictions. Consider taxes, flexibility, and how your child might eventually use the money.
2. Give working teens a head start with a Roth IRA.
Kids with earned income can contribute to a Roth IRA, allowing their savings to grow tax-free. Starting young creates an opportunity to build significant long-term wealth.
3. A 529 savings plan offers flexibility beyond college tuition.
529 savings plans can cover eligible expenses at public and private colleges, graduate schools, and trade schools. Unused funds may also be transferred to another beneficiary.
4. Take advantage of 529 tax benefits to maximize education savings.
529 investments grow tax-free, and qualified withdrawals are tax-free. Many states also offer tax deductions or credits for contributions, making it worthwhile to compare plans.
5. Think beyond college when planning education expenses.
Beginning in 2026, families can use up to $20,000 annually per student from 529 plans for eligible K–12 expenses, potentially including private school tuition, curriculum materials, and other learning costs. State rules may vary.
