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Saving for college?...Your Roth IRA my Be the best Investment!

Marketwatch.com explains 3 reasons to use a Roth IRA to fund college:

1. Roth IRAs aren't included as an asset on the Fafsa Form

When a child goes to college, if they want to receive student aid, the filing of a Free Application for Federal Student Aid (Fafsa) is pretty much a  must.  Roth IRAs — along with other retirement accounts — aren't considered assets when determining a family's EFC. There's no cap to that amount either, so you may actually be able to accumulate significant sums in a Roth IRA and still qualify for student aid for a child.

2. Roth IRAs are more flexible

If, however, instead of saving money in a 529 plan, you saved the same money in a Roth IRA (you could still earmark some or all of it in your own way for education) and no longer needed those funds for education, it's an easy and tax-efficient transition to use those funds in retirement. If you actually did need to use the funds to pay for a child's college expenses, the Roth IRA may even provide the same tax efficiencies as a 529 plan.

3. Roth IRAs may provide the same tax-free treatment for distributions

Even if you're not 59 ½ (or haven't met the required holding period) at the time education-related expenses need to be paid, you may still be able to take funds out of your Roth IRA tax and penalty free. Roth IRA contributions can be distributed at any age, and at any time, 100% tax and penalty free. So, for instance, if you contribute $5,000 a year to a Roth IRA for the next 10 years before your child goes to college (and take no distributions in the interim), at the very worst, you'd be able to take $50,000 tax and penalty free from your Roth IRA.

Very helpful college planning article.  Here's the link

Posted on Wednesday, March 25 by Registered CommenterWise Owl in | Comments Off