Educational Resource Guide Sound advice— for an uncertain market. The right partnership can give you one of the most powerful tools in investing today—confidence. Your UBS Financial Advisor, backed by world-class research and resources, will work with you to create your plan that offers clear direction and relevant advice. Because in order to rebuild confidence in today’s unpredictable marketplace, you need to surround yourself with a team you can count on. Redwood Wealth Management UBS Financial Services Inc. 4000 Town Center Boulevard, Suite 100 Canonsburg, PA 15317 877-320-9160
Joseph Rongaus First Vice President– Wealth Management 724-416-6040 joseph.rongaus@ubs.com
ubs.com/team/redwood As a firm providing wealth management services to clients, we offer both investment advisory and brokerage services. These services are separate and distinct, differ in material ways and are governed by different laws and separate contracts. For more information on the distinctions between our brokerage and investment advisory services, please speak with your Financial Advisor or visit our website at ubs.com/workingwithus. UBS Financial Services Inc., its affiliates, and its employees are not in the business of providing tax or legal advice. Clients should seek advice based on their particular circumstances from an independent tax advisor. ©UBS 2013. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS AG. Member SIPC. 31.20_Ad_7.5x4.375_PR0319_RonJ
College Funding 31.20_Ad_7.5x4.375_PR0319_RonJ.indd 1
Start early and keep saving
3/20/13 4:36 PM
Joseph Rongaus, UBS Financial Services Inc. Every client has different goals, but nearly all say that funding college for their children and grandchildren is a top priority. With college more expensive each passing year, one thing is certain: the sooner your funding strategy begins, the better. Below are some funding options. 529 Plans—more flexibility to invest and contribute A 529 College Savings Plan is a popular way for parents and grandparents of younger children to save for college. A 529 account allows tax-free accumulation and withdrawal of assets for qualified expenses at most U.S. colleges and universities. Earnings on nonqualified withdrawals may be subject to federal income tax and a ten percent federal penalty tax, as well as state and local income taxes. Offered and administered by individual states, 529 plans provide a variety of professionally-managed investment options, typically mutual funds, from which to choose. And many 529 plans offer special state income tax deductions to investors. Check with your financial advisor for which states offer these benefits. These plans are especially versatile when it comes to contributions and gifting. Anyone, including grandparents, relatives, and family friends, can make tax-free contributions up to their individual gift exemption of $14,000 or $28,000 for married couples. Consider asking grandparents or extended family members to serve as owners of 529 plans, because assets held this way do not factor in to your Expected Family Contribution (EFC) which affects financial aid eligibility. 24
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In addition, 529 plans allow you to make a one-time accelerated contribution without incurring gift tax. The contribution may be equal to as much as five years’ worth of annual contributions, up to the combined annual gift tax exemption. Based on the 2013 gift tax exemption of $14,000 per person, you and your spouse could contribute $140,000 ($28,000 x 5) to a 529 plan at once, putting more money to work faster and removing assets from your taxable estate more quickly. Tax law allows the couple to spread the gift over five years in order to avoid federal gift tax, provided no other gifts are made to the same beneficiary during that time period. Coverdell Education Savings Account Beyond 529 plans, you might consider establishing a Coverdell Education Savings Account, which is similar to an IRA. A Coverdell allows for contributions of up to $2,000 per year per child, provided the contributor meets certain income guidelines. Unlike 529 plans, proceeds from a Coverdell ESA can be used for all levels of education, including K-12. However, only individuals with adjusted gross income of less than $110,000 ($220,000 for married couples) may contribute to a Coverdell ESA. Starting early is key to building up the financial reserves you’ll need for your children’s college fund and these options are some of the best strategies available to help you do just that! n This article was written and provided by UBS Financial Services Inc. This information is provided for informational purposes only. See ad on this page.