If you’re starting to save for college costs, there are a variety of accounts with special tax structures you could consider to help your savings grow. Remember, it’s never too early (or too late) to start saving, and saving little by little over time can really add up. Here are a few examples of tax-advantaged college savings accounts.
529 savings plans are flexible, tax-advantaged accounts designed specifically for education savings. Any earnings on contributions grow federal income tax deferred. Withdrawals taken to pay for qualified education expenses such as tuition, fees, and room and board are free from federal income taxes.
With a 529, you may also be able to offer family and friends a simple way to gift contributions for your child.
UGMA/UTMAs are custodial accounts that allows parents (and others) to make an irrevocable gift to a minor that can be used for college or any other purpose. For federal tax purposes, investment earnings are generally taxed at the minor’s tax rate, which is usually lower than a parent’s rate.
More to explore
Set a college savings goal
Use our Planning & Guidance Center to set up goals and plans.
Top tips for custodial accounts
A UGMA/UTMA account can help you invest a child's money. Be sure you understand the pros and cons.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.