NOTICE: Due to system maintenance on August 23, our phone banking system may not be available from 4:00 am to 5:00 am (PST). For the nearest branch and ATM locations, click here.

  •  
  • Planning for College Costs 

    The cost of sending a child to college is increasing and shows very few signs of slowing. Average costs have almost doubled over the past few years.  And, do not forget to include additional costs of books, transportation and entertainment.

    Starting to save early is critical and like any saving goal, the sooner you start and the more you save, the more you will have when you need it.

    Starting to save on a regular and consistent basis is most important. The next decision to consider is how to hold the funds.

    Section 529 College Savings Plans  

    These college savings plans are now offered by over 40 states and were also enhanced by the 2001 Tax Law. While the plans are offered by the state, there is no restriction on where the child attends college utilizing the funds. One potential drawback is that there are usually limited investment options. It makes sense to look at several states programs to find one that offers the investment choices you desire.

    There are special provisions to allow of up to five years of contributions to be made without gift taxes. Withdrawals used for qualified educational purposes are excluded from federal income taxation.

    An account can be opened with a minimum of $250.

    We also offer a flexible start option of $50 for 5 months to get you the starting required balance of $250.

    As Part of Regular Savings 

    One option for parents is to just consider saving for a child's college as part of their total savings program. This is simple, but doesn't provide an easy way to identify how much progress is being made toward a goal. Establishing a separate account for college savings helps with monitoring progress. However, the earnings on the funds will be taxable to the parents.

    Custodial Accounts 

    Another option is to establish a custodial account for the child. Using a Uniform Gifts to Minors Act (UGMA) or Uniform Transfer to Minor Act (UTMA) account is an easy and legal way to transfer the ownership of assets to a child. With a UGMA or UTMA account, the parent creates a custodial account on behalf of the minor child. Assets are transferred into the account and the custodian, usually a parent, manages the account until the child reaches legal age. At that point, the child can do whatever he or she wishes with the assets. Transfers to these accounts are irrevocable. Earnings on the account are taxable to the child which may save some income taxes.

    Coverdell Education Savings Accounts 

    These accounts function like an IRA with earnings not being taxed if the funds are used for qualified education purposes. The largest drawback to Coverdell ESA's are that annual contributions are limited to $2000. There are also income limitations for these accounts.

    Contact us today at (800) 851-8549 or email us at invest@techcu.com.

    Enabling a child to attend the college of their choice and get an education that will prepare them for a successful and productive life is one of the greatest gifts you can give. 

Give Us a Call

We look forward to chatting with you.

(800) 553-0880

View Our Contact Info

Visit Us in Person

We’re here to serve your needs in person at our San Jose Headquarters. Visit us at 2010 N. First Street, San Jose, CA 95131.
Get Directions

Want More Info?

Interested in learning more about all we have to offer? Receive personal finance tips along with emails focused on key topics. You can even sign up for our monthly newsletter.
Request More Information

[+] Feedback