--- title: Smart college savings options for your child (and your money) description: Learn more about some smart college savings options. These are ways to help your child's college fund grow - and reap some tax benefits now. image: https://blog.ffbkc.com/hubfs/Projects/2020/2.%20Blog/Hero%20Image/Saving/saving%20for%20college-blog-hero.jpg --- - [Rates](https://www.ffbkc.com/rates/) - [Help](https://www.ffbkc.com/help/) - [About](https://www.ffbkc.com/about/) - [Careers](https://www.ffbkc.com/careers/) - [Contact](https://www.ffbkc.com/contact/) - [Locations](https://www.ffbkc.com/locations/) - Search [![First Federal Bank of Kansas City](https://blog.ffbkc.com/hubfs/raw_assets/public/First_Federal_Bank_July_2020/images/logo.svg "First Federal Bank of Kansas City")](https://www.ffbkc.com/) - Login - [Online banking](https://secure-firstfedbankkc.com/SignOn/Logon) - [Make a loan payment](https://paybill.com/consumer/?ClientId=FFBKC_Reg) - [Locations](https://www.ffbkc.com/locations/) - [Contact](https://www.ffbkc.com/contact/) - [Search](https://www.ffbkc.com/search/) - [Borrow](https://www.ffbkc.com/borrow/) - Column 1 - 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And with the right college savings option they could be able to jump right into the real world without being overwhelmed by debt.   We’ll look at some common college savings options and learn more about what’s available. Of course, before you get too far down the road, it’s smart to talk with a tax advisor or financial planner to make sure you know all the tax implications of your decision.  ### 529 College Savings Plan  #### **THE BASICS** The 529 College Savings Plan allows families to save for higher education and let that money grow tax free. Money in the plan can be used to pay for many things related to college, including tuition, fees, books, supplies, room and board, and more. A parent, grandparent or other family member can open and contribute to the account.  ##### **WHAT ELSE TO KNOW** - **Taxes** - You won’t get a federal tax deduction on contributions into the account, but some states (including Kansas and Missouri) allow you to deduct money you put in from state taxes. Earnings are tax-free as long as they are used for qualifying higher education expenses when withdrawn.    - **Contribution limit** - There are no yearly contribution limits - but it’s important to understand how larger gifts to a 529 account can affect annual gift tax and lifetime estate tax limits. A financial advisor can help you understand what those limits mean for you.  - **Investments** - You’ll usually have a choice of investment options so you can decide how your money is invested.   ### Coverdell Education Savings Account (ESA)  #### **THE BASICS** A Coverdell ESA is an account designed to help families save for college. A parent or guardian chooses the investments and the money is controlled by that adult. And the money in the account grows tax free.  ##### **WHAT ELSE TO KNOW** - **Taxes** - You won’t get a tax deduction on contributions into the account, but you won’t pay taxes on withdrawals in the future as long as those withdrawals are used for qualifying higher education expenses.  - **Contribution limit** - There’s an annual $2,000 contribution limit. And you’re not eligible to contribute if you make over $110,000 (for single filers) or $220,000 (for joint filers).  - **Investments** - The investments in the plan can vary. A financial advisor can help you find the best investments for your situation.  - **Age limits** - You can’t make contributions to the account after the child reaches age 18. And money in the account must be withdrawn by the time he or she turns 30.  ### UGMA & UTMA plans  #### **THE BASICS** The UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) plans allow parents to set money aside for their children’s college expenses. The money is held in an account controlled by a guardian, usually a parent, and is turned over to the kid’s control at anywhere from age 18 to 21, depending on the state.  What else to know: - **Taxes** - The money is in the child’s name, so it’s taxed at his/her (usually lower) rate, rather than the parent’s tax rate.  - **Contribution limit** - There are no yearly contribution limits - but it’s important to understand how larger gifts to a UGMA or UTMA account can affect annual gift tax and lifetime estate tax limits. A financial advisor can help you understand what those limits mean for you.   - **Financial aid** - A large UGMA or UTMA account can reduce the amount of financial aid a student can receive.   - **Investments** - The types of investments in the plan can vary, based on whether you choose a UGMA or UTMA plan. A financial advisor can help you find the best plan for your situation.   - **Age limits** - Your child gains control of the money in the account at age 18 or 21, depending on the state. For more great know-how on how you can get ready for the future, check out our ["Ruling Your Tomorrows"](https://learn.ffbkc.com/ruling-your-tomorrows-ebook) ebook. #### Download our Mobile Banking app [![Download the First Federal Mobile Banking for iPhone app on the App Store](https://blog.ffbkc.com/hubfs/raw_assets/public/First_Federal_Bank_July_2020/images/app_store.original.png)](https://itunes.apple.com/us/app/first-federal-mobile-banking-for-iphone/id905357916?mt=8) [![Get the First Federal Mobile Banking app on Google Play](https://blog.ffbkc.com/hubfs/raw_assets/public/First_Federal_Bank_July_2020/images/google_play.original.png)](https://play.google.com/store/apps/details?id=com.ffbok.mobile) ## Related Content ##### [Where to Put Your Short-term Savings You have money that you may need to get to. Maybe it’s money in an emergency fund. Maybe it’s savings that you just don’t feel comfortable locking up. 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