By starting today to help fund the education of a child in your life, you can help that child fulfill his or her dreams — whatever they may be.
Time is one of your most powerful allies when saving for college. Start early and consider the many options available to help meet your education funding goals:
529 College Savings Plan — earnings grow tax-deferred, and if withdrawn for qualified higher education expenses, are free from federal income tax.1
Coverdell Education Savings Account — earnings grow tax-deferred, can be used for qualified elementary, secondary and post-secondary school expenses, and distributions may be exempt from federal income tax.
Mutual Funds — investing in mutual funds provides an opportunity for greater growth potential than fixed-interest products, and withdrawals are taxed as ordinary income to the extent of the gain. Along with greater growth potential, mutual funds have a higher degree of risk.
Roth IRA — while contributions are not tax-deductible, earnings grow tax-deferred and qualified distributions are tax-free2; earnings used for education are not subject to the 10 percent IRS penalty for withdrawals prior to age 59½.
Permanent Life Insurance3,4 — cash values grow tax-deferred, and can be withdrawn for education without impacting eligibility for financial aid. In case you die, proceeds from the policy are paid directly to your beneficiaries, who may use them toward education costs.
Also, remember to explore financial aid options and scholarship opportunities — contact school counselors or check out the SmartStudent ™ Guide to Financial Aid for assistance.
Farm Bureau also has online calculators to help with education funding strategies on the right side of this page.
Farm Bureau Financial Services has several options available for paying for college. Talk to a local agent today.
1 Neither the company nor its agents give tax, accounting or legal advice. Please consult your professional adviser in these areas.
2 Income-tax treatment of Roth IRAs at the state level may differ.
3 You can withdraw and/or borrow money from your cash value tax-free up to a certain amount to help pay education expenses, depending on the type of policy.
4Policy loans will reduce the death benefit at the time of withdrawal if the amount is not repaid by the time of death. Withdrawals over the cost basis in the policy may result in a taxable event.