FOR BREAKING NEWS VISIT WWW.QNS.COM MAY 16, 2019 • THE QUEENS COURIER 33
YOUR PARTNER IN THE
STRUGGLE FOR JUSTICE
BEST ATTORNEY AND
BEST PERSONAL INJURY LAWYER
YOUR PARTNER IN THE STRUGGLE FOR JUSTICE
JOHN J. CIAFONE ESQ.
ATTORNEY
THANK YOU!
25-59 Steinway Street, Astoria, NY 11103
718-278-3900
johnjciafone@yahoo.com
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WINNER 3 YEARS IN A ROW!
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Call Now & End Your Tax Nightmare!
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Co-Author of the
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“Breaking the Tax Code”
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Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
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TAX TIPS
Financial Planning
for College Education
BY JOHN SAVIGNANO, CPA
There are many ways to save for college education. It’s the how and where
that is the hard part.
The most common form of college savings is the 529 plan. After the recent
tax law changes, 529 plans may be more attractive than ever for some
families. In New York state married couples filing jointly can deduct up to
$10,000 annually for contributions and single filers can deduct up to $5,000.
Coupled with tax-deferred growth and tax-free withdrawals if used for
higher education there is a lot to like.
With the recent federal tax reform, 529 funds can be used for the first time
toward private elementary or secondary school tuition. For families
intending to go this route, this added flexibility may provide the incentive to
take full advantage of this state tax deduction.
But the 529 plan is not for everyone. Many parents want even greater
savings flexibility, view financial aid incentives as a more significant
planning opportunity or want to save for their child’s future without
obligating them to have to use it for college. Perhaps their child wants to be
an actor, an athlete, pursue a trade, etc.
Maybe a parent feels comfortable they have the luxury of affording college
from cash flow-and simply want to provide their child a “head start” with
money that can be used for a home down payment, a wedding, etc.
The opposite could be true-parents want to save-but are concerned about
their own financial security. They want a safety net free of income taxes and
penalties in case an emergency comes along, or financial priorities change.
You can borrow for college, but you can’t borrow for retirement.
For those whose income or financial position allows, contributing to a
Roth IRA each year can be a unique tool. Many are familiar with the basic
Roth story-after tax contributions, tax-free withdrawal of gains. What many
don’t realize is that any principal deposit can be withdrawn penalty and
tax-free five years after contribution. This can allow future-focused savers a
great emergency fund or alternative college savings path.
Also, all withdrawals from both traditional IRAs and gains in Roth IRAs,
while not tax-free, are exempt from penalty if used for qualified education
expenses.
Another arrow in the college savings quiver is whole life insurance. Often
misunderstood or poorly implemented, this form of cash value life
insurance can make sense for those who can check the following boxes:
desire to have a death benefit to protect their family; children are young-10
years or more until college; prefer a conservative investment; and family
might be a candidate for financial aid. Cash value whole life, particularly the
type you pay for a specific, limited duration (such as 10 years), can provide
a less-volatile rate of return. There is also the peace of mind of the death
benefit helping to fund college costs should the unexpected happen.
The most common financial aid application does not ask for the cash value
of life insurance policies- while they certainly do want to know how much
you have saved in a 529 plan or other investment account.
Another savings tool that is often overlooked for the purpose of college is
the all -too-common, yet underutilized, brokerage account. People save in
their 401(k) and put a certain amount into an emergency fund, but rarely do
they invest simply for the purpose of investing. Buying a quality mutual
fund, exchange-traded fund or stock can be powerful. Over the years this
can and should build wealth. This wealth can be used for any purpose you
want.
John Savignano is a partner with Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second Floor, in Long Island City. If you have
any questions or require additional information, please call John at
718-707-0955.
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