Objective | Goal
Invest today to aim for your future goals.
Investing for Kids: Paying for College & Beyond
We believe it is never too early to consider investments for children and grandchildren, especially when you take into consideration tuition increases and more expensive needs later in life.
The fact is, paying for college and other academic pursuits is costly. Helping your child, or a child you know, pay for his or her education and all the associated costs is thoughtful, and the process can be easy to begin.
If you’re interested in investment opportunities for children and grandchildren, Commonwealth Funds is your go-to resource. We can help you determine the account type that would best meet your child’s or grandchild’s needs. We also are dedicated to helping you manage a minor’s investment account so you can bring it home for them.
Coverdell Education Savings Account (ESA)
When investors open an ESA, potential earnings grow with no current income tax. Even better, withdrawals are free from federal taxes so long as you use the money to pay for qualified education expenses, which typically include tuition, books, supplies, uniforms, room and board, computer equipment, and internet service. Tax-free withdrawals apply not only to college expenses, but also to elementary and secondary education expenses for public, private, or parochial schools.
Keep in mind, there’s an income eligibility limit applied to the person who contributes to the account that currently limits contributions to $2,000 per year, per child. Please read the Coverdell Education Savings Account disclosures.
Uniform Gift to Minor Act (UGMA) & Uniform Transfers to Minors Act (UTMA)
These custodial accounts are set up by any adult and managed on behalf of a minor. UGMA allows bank deposits and mutual funds to be gifted or transferred to a minor and UTMA permits relatives and friends to gift or transfer any type of asset to a minor.
The accounts are typically turned over to the beneficiary’s control at the age of 18 to 21 (depending on the state in which the account was opened) and the beneficiary can use the funds in any way he or she chooses. Prior to the turnover date, the funds must be used for the minor’s benefit.