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Custodial Accounts
Custodial account gains are not tax-free and the student gets control of the account either at age 18 or 21.
529 Savings Plans1
Authorized under Section 529 of the Internal Revenue Code, this plan provides savers with professionally managed investment portfolios. Withdrawals are exempt from federal taxes if used for qualified higher education expenses. For more information, read Publication 970 on the Internal Revenue Service website.
State Prepaid Tuition Programs
Allows parents to save for tuition with the guarantee that the plan will rise in value at the same rate as college tuition. State plans vary in regard to participation, tax benefits, etc.
Coverdell Education Savings Accounts
These accounts are created only for paying the qualified higher education expenses of the designated beneficiary. Friends or relatives may make contributions and the child may have multiple IRAs subject to annual contribution limits. For more information, read Publication 970 on the Internal Revenue Service website.
Series EE Savings Bonds
Contributions are not tax-deductible. However, you may be able to exclude all or part of the interest earned when the bonds are redeemed to pay post-secondary education tuition and fees.
Common Stock
Represents a share in ownership in a company. Investments must be carefully selected and managed. Shareholders have the full share of risk.
Mutual Funds2
Most mutual funds include stock and/or bond holdings in many different companies. Your investment is pooled with other investors providing diversification that spreads your risk.
Learn more about investing or contact a registered sales representative at TCF to help you choose the right investments.
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