College Savings: Roth or 529 Plan?

This week, Craig Siminski, of CMS Retirement Income Planning, shares some information that will be helpful for parents, grandparents, and others who are looking into various ways to save for a young person’s college education.

Roth IRAs were primarily intended as a tax-advantaged way to save for retirement, but for some parents (and students with earned income), a Roth IRA can double as a college savings tool.  On the other hand, state-based 529 savings plans were designed specifically to help families set aside money for future education costs.

Roth IRAs and 529 plans are both funded with after-tax dollars, contributions accumulate tax deferred, and qualified distributions are tax-free. Still, there are a number of key distinctions to keep in mind.

Eligibility and Contribution Limits

In 2019, the maximum IRA contribution for someone under age 50 is $6,000 ($7,000 for those 50 and older). Roth IRA eligibility limits phase out for single filers with incomes between $122,000 and $137,000 ($193,000 to $203,000 for joint filers).

Anyone can contribute to a 529 plan; there are no restrictions based on income. And lifetime contribution limits are high, typically $300,000 and up (gift tax rules may apply). Each plan has …

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 21 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

Please let Craig know that the Green Bay News Network Sent You!

CMS Retirement Income Planning

Craig Siminski is a Retirement Income Planner professional with over sixteen years of experience. His goal is to help ensure his clients will have enough income to maintain their dignity and independence in retirement.

Craig is committed to designing and implementing financial strategies that focus on his clients’ needs.  He seeks to be a lifetime resource for each and every client.

Give him a call at 920-569-8363 or email him at [email protected] and tell him the Green Bay News Network sent you!