Start saving now for your child’s college education

Helping parents realize financial goals for their children is also an important aspect of Sandy Spring Bank. From the first job to the first car, to going away for college, parents and children need to understand the financial features associated with these major life changes. Set goals for yourself or your children.

529 Plans

With college tuition and fees increasing an average of 7% last year (Source: The College Board, Trends in College Pricing, 2004), the 529 plan was designed to allow you to effectively save for your child’s college education. Anyone can contribute to the plan – parents, grandparents, relatives-and contributions are considered completed gifts for federal gift and estate tax purposes excludable from the client’s taxable estate. Generally, individuals are allowed to contribute up to $55,000 for a beneficiary in a single year ($110,000 for married couples) without federal gift tax consequences, provided the contributor does not make any additional gifts to that beneficiary over a five-year period. In addition, there is no federal income tax due on any earnings while they are in the 529 plan. And distributions for qualified education expenses are federal income tax free.1

Coverdell Education Savings Account

Formerly known as an Education IRA, a Coverdell Education Savings Account is designed to help you prepare for a child’s future education. As with the 529 Plan, anyone can contribute to the account (income limits apply) – parents, grandparents, relatives – and distributions for qualified education expenses are income tax free. Education expenses may be used not only for higher education, but also for elementary and secondary school as well. The maximum amount a child may receive is $2,000 per year. Contributions for the tax year may be made up to the tax return due date of the contributor. Also, you can make a contribution to both a Coverdell Education Savings Account and a 529 Plan in the same year for the same beneficiary.

For more information:

1 Under a “sunset provision”, the tax exemption for earnings on qualified withdrawals is scheduled to expire on 12/31/10, unless extended by Congress. As with all tax related decisions, a tax advisor should be consulted.


Not FDIC Insured | No Bank Guarantee | May Lose Value | Not Insured by any Federal Government Agency | Not a Bank Deposit

Securities and advisory services are offered through, and Financial Advisors and Consultants are registered with, LPL Financial, a registered investment advisor, member FINRA / SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Sandy Spring Wealth Management and Sandy Spring Bank are not registered broker/dealers and not affiliated with LPL Financial.

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