Just wondering if anyone has a customer setup on one of these? I have a high income customer (MFJ) that wants to setup something for her child's education. Alot of the credits for education and child tax credit are knocked out and/or lowered. The only thing I can think of is a ESA. The child she wants to start this for is already 16 years old. Is there any need in her starting one now? I don't think it would even earn enough.
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I'm not a big fan of the Coverdell ESA. All the contributor saves is the tax on the earnings on the funds contributed, which is a maximum of only $2k per year per beneficiary, and only up to age 18. Also the ability to contribute phases out at AGI of $95k~$110k or $190k~$220, so your "high income customer" might not be eligible anyway. IMO a 529 Plan is much better.Roland Slugg
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Thanks so much for posting. I will research the 529 Plan. Looks like Georgia allows a deduction for it.Comment
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Didn't know that
If Georgia allows a deduction, that would be great. There is no deduction available on the federal return, but the earnings are tax-exempt, as long as the proceeds are eventually used for qualified education costs.
Every state offers a 529 Plan, and people can invest in ANY of them, not just their state of residence. However, the plans do vary from state to state, so I suggest you (or your client) do some serious research. The www can be a big help here. In fact I believe there are web sites that compare all the plans and rank them in order of desirability. I recall hearing on a financial talk show a few months ago that the Utah plan was rated #1.Roland Slugg
"I do what I can."Comment
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I agree with others in that under normal circumstances the 529plan is the way to go. specially when compared to UTMA accounts given the tax treatment for kiddie tax.Originally posted by geekgirldany View Post
Personally I think your clients time to invest for college education has passed. At this point if the client were mine, and the child's age being considered I would look at fixed income instruments like Cd's.
I preface this by saying that this is there only child. If they have younger children with more time horizon then the 529plan option may be back on. Or if the parents had a large amount of assets to contribute to the 529plan- say five years worth of gifting.
In any case I am not sure that your client will benefit that greatly by any option. The time to have this conversation should have been 16 years ago.Comment
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I agree. She came by for on consultation on their taxes for 2008. I told her it really was too late for college planning. She said she thought so but still wanted to ask. Good customers in a tough situation with sickness.Comment
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