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  • Liann Walborsky
    Liann Walborsky
    » Communications Manager, Tech CU
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    savings vehicles for your kids

    September 27, 2011 Posted by: Liann Walborsky

    When you think about saving money for your kids—most people tend to focus on one issue only: college and a 529 plan. Important? Absolutely. There are, however, other kinds of accounts you may want to explore when it comes to teaching your kids about the importance of saving.  Before you open up an account, make sure that you find out if there is a minimum amount required to invest, and what kinds of fees you could be charged. 


    Roth IRA: You can open up a custodial Roth IRA as long as your child can show some kind of income (even babysitting). There is no age limit (a 12-year old could even open one up)—and if your child is not filing a tax return, they simply need to keep track of their earnings. Contributions are limited to $5000 for the year—but imagine the benefit of beginning to save for retirement as a mere tween—and what a potential future gift you are providing to your child. These also give kids a way to begin understanding the benefits of money growing and compounding over a long period of time. 


    Coverdells: Never heard of them? You’re not alone. They are actually pretty similar to a 529—however the money put away can be used for educational expenses all the way from kindergarten through high school. You can also generally choose from a wider range of investment options than with a 529. 


    CUTMA Accounts: The letters stand for Uniform Transfers to Minors Act, which basically refers to a gift of cash or securities given to a minor, and managed by a custodian. This type of account makes the most sense for a child or teen who is trying to save for something in particular. Be aware that earnings on the account are taxable.

    Did you know that Tech CU offers CUTMA accounts? For more information, contact us at 1-800 553-0880 or come into any of our 10 conveniently located financial centers.

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    Cheston on October 13, 2011:
    In addition to CUTMAs, Tech CU financial centers offer Roth IRAs.



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