Saving for College
It’s never too early…
Your child's tuition could be one of the largest expenditures you ever make. Fortunately, there are many options available. Educational goals can become a reality by planning ahead and making saving for college a priority.
529 College Savings Plan for Arkansans
The GIFT College Investing Plan, a powerful 529 program offered by the State of Arkansas, can be used for any eligible institution in the United States and abroad. Recently, the Arkansas Section 529 Plan Review Committee has set aside funds for matching grants. The Aspiring Scholars Matching Grant Program has been designed to help parents and other account plan owners add to their GIFT Plan accounts - and to bring the dream of higher education closer to being a reality. The program provides matching grants of up to $500 per year to eligible students, based on a household's income levels. To access the Arkansas 529 Savings Plan, visit Arkansas GIFT College Investing Plan.
Coverdell Education Savings Account
A Coverdell Education Saving Account (ESA) is a tax-advantaged investment account designed to encourage savings covering future education expenses (elementary, secondary or college), such as tuition, books, uniform, etc. It is found at section 530 of the Internal Revenue Code (26 U.S.C. § 530).
The tax treatment of a Coverdell ESA is similar to 529 plans with a few differences. Like a 529 plan, a Coverdell ESA allows money to grow tax deferred and proceeds to be withdrawn tax free for qualified education expenses at a qualified institution. However, the definition of qualified expenses in an ESA includes primary and secondary school, not just college and university. The account is named for its primary supporter in the U.S. Senate, the late Senator Paul Coverdell. To view additional information on Education Savings Accounts, visit Coverdell ESA Information from IRS.
U.S. Savings Bonds
EE and I bonds purchased after 1989 by someone at least 24 years old may be redeemed tax-free when the bond owners, their spouses, or dependents pay for college tuition and fees. Beginning in 2011, the tax exclusion was phased out at certain income limits specified at U.S. Department of Treasury information on Savings Bonds.
Individual Retirement Accounts
Early withdrawal penalties are waived when Roth IRAs and traditional IRAs are used to pay the qualified post-secondary education costs of yourself, your spouse, your children, or your grandchildren. (Taxes may still be due on the withdrawals, however.) View details at IRS Information on IRAs.
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