M&T Bank : Education Planning
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Saving and Investing for Education

One of the most formidable financial challenges is planning for a child's college education. It is becoming increasingly difficult for most families to raise sufficient funds for meeting the costs of a college education. The annual tuition at a private four-year college costs on average $27,200, while public four-year colleges charge on average $7,600, and public two-year colleges cost on average $2,7001. The rising costs of higher education often create a lot of anxiety for both parents and prospective college students.

At M&T Securities we can help you assess your situation and identify available assets and funding sources, and we can suggest possible solutions to help you achieve your education funding goals.

Qualified Tuition Programs (529 Plans)
529 Plans can be a helpful way of saving for your child's college education. In addition, the federal tax law places no income level restrictions on who can make 529 Plan contributions. Anyone can contribute money on behalf of a beneficiary, including friends, family, colleagues and acquaintances. While plan contributions are not deductible on your federal return, plan earnings used for account beneficiary's tuition and other qualified expenses are generally tax-free. There may be additional state tax benefits associated with investing in the 529 Plan sponsored by the state within which you or the beneficiary reside.

Before buying a 529 plan, you should find out about the particular plan you are considering and be sure you understand the plan’s description of fees and expenses.

Coverdell Education Savings Account (ESA)
Coverdell accounts are trusts or custodial accounts created exclusively for the purpose of paying the qualified education expenses of the designated beneficiary of the account. The beneficiary’s total contributions cannot exceed $2,000 per year, until he/she turns 18. Additionally, there are contribution limits for taxpayers based on the contributor's Modified Adjusted Gross Income.

ESA account distributions for qualified expenses are generally tax-free. An ESA may be used for elementary, secondary or post-secondary education.

If there is a balance in the ESA when the beneficiary reaches age 30, it generally must be distributed within 30 days (or rolled over to another beneficiary whom is under age 30). Earnings on the account would become taxable and subject to a 10% tax.

Contact Us
Learn more about saving for education, 529 plans, and Coverdell Education Savings Accounts. To speak with an M&T Securities registered representative, contact us online or stop by any M&T Bank branch today. We can also be reached at 1-800-724-7788.

 1Trends in college pricing 2010. Trends In Higher Education Series, Retrieved from http://trends.collegeboard.org/downloads/college_pricing/highlights.pdf

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