Saving for College
Do Your College Savings Returns Need a Boost?
With college costs continuing to rocket skyward, parents are growing concerned over the limitations of their savings options and their poor returns. 529 college savings plans have been criticized for their anemic returns and high fees, and parents are limited to plans available in their state. One option that is receiving much more attention by savers seeking greater returns is the Coverdale Education Savings Accounts. The big reason is that, with a Coverdale, you are free to establish an account with any financial institution and invest in any vehicle offered through that institution. This will enable you to fashion together your own mix of investments tailored to your growth objective and risk tolerance. Working with discount brokers, you can keep your investment costs to a minimum.
Coverdale plans are limited to $2000 annual contributions which phase out for incomes over $95,000, but the earnings grow tax free, and the funds can be withdrawn tax free when used for qualified education expenses, including elementary and secondary expenses. Oh, there is one small caveat: Congress will have to vote to extend some of the benefits of the Coverdale beyond 2012. If they don’t the maximum contribution amount could revert back to $500 annually. The odds are that they will.