It’s that time of year again. Meeting new teachers, stores filled with pencils and backpacks and wondering where the summer went. If you’re like me, you’re also concerned about the future cost of education and what’s the best way to save for your child.
Pacific Service CU can help you organize or open accounts to benefit your dependents and you. We offer ways to prepare and protect your investments for the future of your children or grandchildren.
Here are a couple ways we can help:
Living Trust Accounts
A living trust allows you to direct how your assets will pass to your heirs. One of the benefits to a living trust is that the trust assets may not be subject to probate — potentially saving thousands of dollars. You must have your trust agreements established before we can set up your trust account.
Coverdell Education Savings Account (ESA)
The Coverdell Education Savings Account (ESA), often called an Education IRA, allows individuals to save money for a child’s education on a tax-favored basis. Members can deposit after-tax contributions up to $2,000 per child, per year depending on their income. Contributions and earnings are tax free when withdrawn to pay for qualified education expenses for that child.
Gift to Minor
Another flexible and cost-effective way to save for a child is a Gift to Minor account. We can set up a custodial account which allows you to gift assets to a minor during your lifetime. You can give up to $12,000 per year ($24,000 per year for a couple) without having to pay federal gift tax. Other adults may also contribute to the account (hello Grandma!) as much as $12,000 per person per year free of federal gift tax. While the minor is below the legal adult age, a custodian must be appointed to the account. All withdrawals must be for the benefit of the child until after the child reaches legal age. Upon reaching the legal age, the minor gains control of the account. Withdrawals can be used for any purpose.
Auto Transfer and Direct Deposit
Ask your employer about having part of your paycheck deposited automatically into your child or grandchild’s Education Savings Account or Gift to Minor account. Or, set up automatic transfers using BranchLine. With systematic deposits, the accounts will grow maintenance free.
Products, Services & Education
We know that each stage of your child’s life brings new and exciting challenges. That’s why we’ve designed products, services and financial education with a younger lifestyle in mind. We offer the tools to help you help your child navigate through the world of financial services and are committed to helping our young members grow into financially-responsible adults.
Here are some links that you might find useful:
Life 101 website – age-specific products, articles and podcasts
Life Lounge – choose a life event to find relevant information for you
Article: Parents Are in a Unique Position to Teach Financial Lessons That Last a Lifetime
Article: Make Investing a Part of Your Kids’ Financial Education
Article: From Toddler to Teen: Age-Appropriate Money Lessons for Kids
Please consult a tax advisor or attorney to determine if any of these accounts are appropriate for you. For more information about any of these services, please call one of our friendly member service representatives at (888) 858-6878, ext. 6231.
Pacific Service CU cannot give members financial, tax, or legal advice regarding Living Trust Accounts, Gift to Minor Accounts, or Education IRAs. Please consult a tax advisor or attorney for more information about these accounts and to determine if any of these accounts are appropriate for you. Stated contribution limits are for 2009 tax year and may change for future tax years.