Variable Life combines life insurance with a tax-deferred investment account, and provides tax-free access to the cash value of the policy. Some insurance companies promote variable life insurance policies as a college savings vehicle because the value of the policy is sheltered from financial aid need analysis formulas.

The advantages of a variable life policy are as follows:

The money is sheltered from the financial aid need analysis process and has no impact on financial aid.
Very high limits on the amounts you can invest.
The parent retains control over the money.
One can withdraw or borrow contributions tax-free …

Generally, if you take a distribution from your IRA before you reach age 59½, you must pay a 10% additional tax on the early distribution. This applies to any IRA you own, whether it is a traditional IRA (including a SEP-IRA), a Roth IRA, or a SIMPLE IRA. The additional tax on an early distribution from a SIMPLE IRA may be as high as 25%.  However, you can take distributions from your IRAs for qualified higher education expenses without having to pay the 10% additional tax. You may owe income tax on at least part of the amount distributed, but …

A custodial account provides a way for a donor (usually parents or grandparents) to gift cash and/or assets to a minor via a simple and cost effective account.  The Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) account enables the custodian to provide management of the account and to direct distributions for the benefit of the child until the child reaches the age in which they can control the account, usually age 18 or 21.  For estate tax purposes, if the donor and the custodian is the same person and if they predecease the beneficiary …

529 Plans and Coverdell Education Savings Accounts are good bets for some, but if you think your child may opt not to go to college, or if you just want more control over your investments, you may want to consider education bonds.

EE bonds and Series I bonds are both part of the Education Bond Program created by the Treasury Department in 1990.  A benefit of this program over the 529 plans is that with these investments you won’t have to pay a penalty if you decide not to use them for your child’s (or your own) education. If you …

The Coverdell Education Savings Account is also referred to as an Education IRA, although it is important to note that a Coverdell Education Savings Account is not an IRA. It allows qualified taxpayers (usually parents and grandparents) to establish and contribute up to $2,000 per year for each designated beneficiary under the age of 18; current tax law prohibits contributions once the designated beneficiary reaches the age of 18.

Contributions are nondeductible but can be invested in any U.S. Add Newstock, bond or mutual fund. A contributor’s income could potentially limit the amount of contributions made in a given year. To contribute fully …