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Types of College Savings Plans
Planning
 

Several different types of accounts are used for education investing. Here are some of the more popular Janus selections with their key characteristics.

 

Education Savings Accounts (ESAs)

  • Can be established for any child under the age of 18 (unless special needs child) 
  • Any earnings grow tax-deferred
  • Qualified distributions are federal income tax-free
  • $2,000 annual contribution limit until attainment of age 18
  • Parents or legal guardian maintain control over the distribution of assets
  • Assets in the ESA may influence ability to qualify for financial aid or limit the availability of certain tax credits

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Custodial (UGMA/UTMA) Accounts

  • An irrevocable gift to a minor - an adult will manage the money, but the minor owns it
  • You can transfer the assets without paying a gift tax and without establishing a trust
  • The child typically takes control of the assets between the ages of 18 and 21
  • The account is not tax-deferred
  • Investment earnings on a portion of the withdrawals are taxable at the child's rate
  • Money doesn't have to be used for education costs, but must be used for the benefit of the child

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Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus , or if available, a summary prospectus containing this and other information. Read it carefully before you invest or send money.

College savings plans should be considered long-term investments and generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties.

Tax information contained herein is not intended or written to be used, and it cannot be used by taxpayers for the purposes of avoiding penalties that may be imposed on taxpayers. Such tax information and any estate planning information is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice.

An ESA should be considered a long-term investment. ESAs generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. Maximum contributions are subject to eligibility requirements. Depending on your eligibility, you may not be able to contribute the maximum amount. For more detailed information about taxes, consult IRS Publication 970 or your tax adviser regarding your personal circumstance.

Janus Distributors LLC