Financial Planning for College
You probably started thinking about financial planning for college when your child was very young. You may even have thought about it before your child was born, perhaps while you were shopping for a bassinet and a teddy bear. After all, it’s one of the major responsibilities you face as a parent: your child’s college education.
Personal growth and expanded horizons are reason enough to send a child to college, but there are more practical considerations, too. College graduates have more jobs to choose from, and they generally make more money than people who only have a high school education. That makes a college education very important for your child’s future.
College Savings Plan: Start Early, Early, Early
The High Cost of Delaying Your College Savings Plan
College Savings Plan Vehicles
529 Plans - Your State Can Help
The Federal Government Offers a Hand
Paying for College: More Possibilities for Revenue
Estimating Savings Needed for College
Annual Rate of Growth Savings
|Number of years
|4 percent||6 percent||8 percent||10 percent|
Example of Adjustments for Calculating Your Required Monthly Savings
|If you need a total of||And if you would save this amount
each month reach $100,000
|The ratio you multiply times
the amount in 2nd Column is
|Giving you the new
monthly savings amount of
|$93,000||$1,508||x 0.93||= $1,402 / month|
|$145,000||$289||x 1.45||= $419 / month|
|$240,000||$216||x 2.40||= $529 / month|
529 Plans are state-sponsored investment programs. There is no guarantee by the issuing municipality or any government agency. There may be tax benefits and other advantages to plans offered by your resident state. You should consider the potential benefits (if any) offered to residents by your own state’s plan (if available) prior to considering another state’s plan.
With very few exceptions, if withdrawals are made from a 529 Plan for purposes other than education, they are considered non-qualified withdrawals, and they are subject to federal - and possibly state - tax penalties. Specifically, the earnings portion of the non-qualified withdrawal will be included in the recipient’s gross income for federal tax purposes, the earnings will be subject to a 10% federal tax penalty, and in some states, additional state tax penalties may apply to the earnings. As with all tax-related decisions, consult with your tax advisor. Please note that assets in a 529 Plan could impact the beneficiary’s ability to qualify for grants and student loans. Annual asset charges for a 529 Plan may be higher than corresponding share classes of underlying mutual funds.
Municipal fund securities are sold by offering statement, which is available from your registered representative. Please carefully consider investment objectives, risks, charges, and expenses before investing. For this and other information about municipal fund securities, please obtain an offering statement and read it carefully before you invest. Investment return and principal value will fluctuate with changes in market conditions such that shares may be worth more or less than original cost when redeemed. Diversification cannot eliminate the risk of investment losses.
Federal tax law allows one 529 account per beneficiary to be rolled over in any 12-month period without changing beneficiaries. Prior to investing in an UGMA/UTMA 529 Plan account, you must liquidate the UGMA/UTMA account and pay all applicable taxes. Consult your own tax or legal advisor regarding your specific situation.
Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. You should seek advice based on your particular circumstances from an independent tax advisor.
New England Financial, its agents, and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent legal and tax advisers regarding your particular set of facts and circumstances.
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