Investment Overview

Education Accounts

Brokerage Accounts

Managed Accounts



Education Accounts:

“As a Certified Financial Planner, Michael Zoli and Ivy Financial Group is specifically suited to help you with all of your family’s education planning”

Education accounts are designed to save for the future education costs of your children.  There are a variety of options beyond the scope of this website, however, we will touch upon the major types and benefits below. It is important to remember that education accounts have different tax benefits and different effects on financial aid and should be carefully reviewed by a professional for individual suitability before purchasing.

Who needs an education account?
Many families are not sure what their future education costs will be and whether these savings accounts will affect their ability to receive financial aid. Although it is true savings accounts can offset financial aid, it should never be a deterrent to save for your child’s education.   The offset in aid is a much smaller percentage than most people realize however this area can be complex and is an important reason to sit down with a professional.

What kinds of education accounts are there?

529 Plans
Named after Section 529 of the IRS tax code, these plans offer tax-deferred growth with tax-free withdrawals.

Investment earnings aren’t taxed while in your account, and withdrawals are tax free when used to pay qualified expenses for any college-bound beneficiary.  With their estate planning benefits, 529 plans also make ideal gifts from grandparents and other family members.

Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may
vary. Please consult with your tax advisor before investing.

UGMA or UTMA Accounts
The Uniform Gifts to Minors Act, commonly known as UGMA, is an act in some states of the United States that allows assets such as securities, where the donor has given up all possession and control, to be held in the custodian's name for the benefit of the minor without an attorney needing to set up a special trust fund. This allows minors in the United States to have property set aside for their benefit, and may achieve some income tax benefit for the child's parents. Once the child reaches the age of majority (18 or 21 depending on the state), the assets become the property of the child and the child can use them for whatever purpose it chooses.

In the majority of states that have adopted the Uniform Transfers to Minors Act (UTMA), the assets are treated similarly: the assets are held in the custodian's name until the child reaches age of majority.

The Internal Revenue Service allows persons to give up to the annual gift tax exclusion to another person without any gift tax consequences. If this recipient person is a minor, the UGMA or UTMA allows the assets to be held in the custodian's name for the benefit of the minor without an attorney setting up a special trust fund. Under the UGMA or UTMA, the ownership of the funds works like it does with any other trust except that the donor must appoint a custodian (the trustee) to look after the account.

A UGMA or UTMA account allows the assets to be taxed at the minor's income tax bracket.  The financial aid impact on UGMA or UTMA accounts can be significant and should be reviewed before filing the Federal and Institutional financial aid forms. 

Coverdell Education Savings Accounts

A Coverdell Education Savings Account (also known as an Education Savings Account, a Coverdell ESA, a Coverdell Account, or just an ESA and formerly known as an Education Individual Retirement Account), is a tax-advantaged investment account  designed to encourage savings to cover future education expenses. It is found at section 530 of the Internal Revenue Code.  Coverdell ESAs have lower maximum contribution limits than 529 plans; currently $2,000 can be contributed per year per child.

The tax treatment of Coverdell ESAs are much the same as 529 plans with a few important differences. Like a 529 plan, Coverdell ESAs allow money to grow tax deferred and proceeds to be withdrawn tax free for qualified education expenses at a qualified institution. However the definition of qualified expenses in an ESA includes primary and secondary school, not just college and university.