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| *Loan,banking and credit>>>deferred tax |
I need a tax deferred education account for myself. Help Plz??? |
I am about to start a 4 year college this year and i want to know if there is a tax deferred education account i can sign up for to pay for college. I plan to pay for a portion of college tuition through loans and financial aid. When i graduate, i want to pay my remainding tuition balance off with what i earned in a tax deferred education account. Something like a IRA account, but specifically for paying for college. I've heard of a 529 Plan, but im not sure if i can open it on my behalf. Any ideas or suggestions? 10 points to the most helpful answer! Thanks. 529 Plans are a pretty good choice. You can take them out on behalf of the student or on behalf of the parent (under a parent will save you more money b/c it is assumed that parents will not contribute as much of their money as a student would for their college education). Therefore, you have a better chance at getting a larger finaid package when you submit a FAFSA. The problem with 529 plans...you can only use them for specified college expenditures. If you are planning on using the money for fees, tuition and books, it won't be a big deal. Growth for this plan is tax-deferred. As far as IRA's go. A good choice for a college IRA is the Roth IRA. If you begin one of these, you can put your money into one account and save for both college and retirement (I know you're not really thinking about that now). The money grows tax-deferred (initial deposits are taxed), but, if you take it out before 5 yrs, you can be charged a 10% fee. That being said, if you use it for specific school expenses, that fee will be waived. However, there is a possibility of still being taxed, not penalized, for the withdrawl. The good thing about it is that if you still have money after you graduate, after 5 yrs, you can take the amount you deposited and use it for whatever you want. To take out the money you made from interest and not be taxed or penalized, you have to wait until you are 59.5. For younger siblings, you can look into the Coverdell plan (similar to the 529, but can use money earlier/ there is also a yearly deposit cap and you must use money by the time you're 30) UTMA- a way to secure that a child will acquire account assets under their name only once they turn a certain age (18-21 depending on state). No restrictions on expenditures but smaller caps on deposits. The two I would recommend are the 529 or the Roth. Because the 529 plan rules vary by state, check your state to see if the plan is decent. For more infor, create a free profile at Scholarships.com. If you log in a few days from now, you will receive an automatic "Welcome Back" email with more specific info on each-- it will also be in the Resources section. You can also find scholarships there and find more information on various gvt. and outside loans, interest rates, and how much you can borrow when you take money out. I also wanted to add to what I said yesterday. I assumed that you were 18 at this point in which case you may open a 529 and use it for your expenses. For those under 18, the 529 must be in the name of someone over 18. Hmm I'm not totally sure if this will help you, but this is what I know and what I am personally doing myself. I am an elementary teacher, and throughout my undergrad I pulled mainly perkins loans and some stafford. With education, you can get 100% of perkins forgiven within 5 years of teaching at a low income school. Also, you can get $5k of your stafford (or $15k or so if teaching spec ed) forgiven. Here is a link that goes more into it http://studentaid.ed.gov/portalswebapp/s... I really hope this helps you! |
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