College Costs: Five Years To Go

If you have five years or more before your teen enters college, consider these savings and investment plans:

• Education IRA

An Education IRA (Coverdell Education Savings Account) can grow tax-deferred and withdrawals are tax free for qualified distributions. There are contribution and distribution limits.

• Section 529 College Savings Plans 1, 2, 3

"529s" may be one of the best plans for the typical student. These accounts allow a variety of contribution sizes and investments can grow tax-deferred. When funds are withdrawn, growth is tax-free if used for qualified college expenses.

• Mutual Funds 2, 3

A mutual fund is a pool of investments managed professionally. When you buy shares of a mutual fund, you effectively own a small portion of the fund's portfolio. Mutual funds have different strategies and objectives including growth and income.

• Uniform Gifts to Minors Act (UGMA)

This type of account can be set up for accumulating funds for a child's benefit and may be used as they choose when they reach the age of majority in their state (usually 18). Growth and earnings can frequently be taxed at a lower rate than the custodian's (parents, guardians, grandparents, etc).

Securities offered through Farmers Financial Solutions, LLC,
30801 Agoura Rd. Bldg. 1, Agoura Hills, CA 91301, 818 584-0200

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