Question

One of your clients wishes to discuss the investment of $60,000. The client wants to begin saving for college for his three young children and wishes to get the most growth and the best possible tax advantages. He is in the highest tax bracket and will be in his late forties when two of the three children will begin college. In the event that any of the children decide that they do not wish to go to college, the client does not want the children to have access to the funds. How should this client invest the money?

Answer 1

Answer:

The client should open up a 529 Education Savings Plan.

Explanation:

Each of the plans listed will either have tax consequences or does not meet the desired criteria other than the 529 Plan. UGMA accounts transfer directly to the minor when the child reaches the age of majority. Mutual funds will be subject to taxation on an annual basis. The Coverdell programs only allow $2,000 of contributions per year. So the 529 is the best plan for this client's children