The amount of money needed for college these days is astronomical.  It pays to plan ahead. 

Gifts, property transfers, and trusts allow parents to shift income and capital gains to their children and lower their taxes.

No particular way of investing for college works for everyone.    A good financial advisor understands these various college funding options, their tax benefits, and their affect on financial aid.  Kensington Financial can answer your questions and help you choose which of these options are right for you.

• Savings bonds are backed by the federal government and are free of federal taxes when used for higher education expenses.  However, bonds have less earnings potential than other investments.

• Coverdell Education Savings Account is an education savings account that any individual with an income less than $110,000 single, or $220,000 joint can contribute to.  The maximum contribution is limited to $2,000 per year and grows tax-free until withdrawn.  Distributions from the account remain tax-free as long as they are used for qualified education expenses.

• Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) allow any person to set aside assets in an investment account for any child.  Your financial services company manages the accounts until the children reach the age of majority, 18 in Pennsylvania.  This is an irrevocable gift, and there is no way to control how the money is used once the child reaches majority age.
• Gifting or Direct Transfer is a means of giving money for educational expenses, $11,000 single and $22,000 joint per grandchild, annually without incurring tax.  The lifetime gift limit is $1 million.

• 529 TAP is a prepaid savings plan that is funded with after-tax dollars, you have control over the funds, earnings in the plan grow tax-deferred and may be withdrawn free of federal income tax for qualified higher education expenses.