Mary McDougall, wealth manager and first vice president of wealth management at Merrill Lynch in Saint Paul, shares three options when it comes to saving for college:
529 Plans
“All of the money you put away in a 529 Plan is tax-deferred,” McDougall says. “And when the money comes out, you’ll never pay tax on it because of tax-free growth.”
Trusts
McDougall suggests a Uniform Trust for Minor Account. “Once parents put money in, it belongs to the kids so it has children’s tax characteristics,” which are lower than adults’.
Capital-Appreciated Stock
If possible, McDougall suggests having a grandparent gift stocks to a grandchild, because it will have no income tax when it’s taken out.
Before investing, McDougall says it’s important for parents to remember: You can borrow money for college, but you can’t borrow money for retirement.
-For more information, call Mary McDougall at 651.298.1786.
