Military Officer - September 2007 - (Page 16)

Uniform Gift to Minor (UGMA) and Uniform Transfer to Minor (UTMA) Accounts: Better known as “custodial accounts,” they are actually owned by the child and managed by a custodian. For children 17 or younger, these accounts are subject to a “kiddie tax.” A new tax law effective in 2008 raises that age from 17 to 24 for full-time students. U.S. Savings Bonds: When used for qualiﬁed education expenses, interest on Series EE and Series I savings bonds purchased after Dec. 31, 1989, by someone 24 years or older is tax-exempt. Step #3 – Start Your Savings Engine Now The sooner you start saving, the more likely you’ll reach your destination. Your savings plan is affected by your child’s age when you start saving. For example, to fully fund $12,000 of education expenses for each of four years, you must save the following amounts based on your child’s current age: Student’s Current Age Birth 7 14 Monthly Savings Necessary $210 $304 $552 Or This Lump Sum $27,625 $33,725 $41,100 The Most Flexible College Savings Vehicle A 529 College Savings Plan A 529 college savings plan offers tax advantages, ﬂexibility, and the ability to contribute large amounts of money to offset future college costs. After-tax dollars grow tax-deferred in state-sponsored investment funds. Distributions are free from taxes when used for qualiﬁed costs associated with attending college, graduate school, many technical schools, and even some foreign colleges. they are family members—including stepsiblings, stepchildren, in-laws, uncles, aunts, nieces, nephews, halfsiblings, and others. For more detailed information, see the 529 savings plan Q&A section on MOAA’s Web site at www.moaa.org/529. TIP Use Your Military Beneﬁts Former military servicemembers often access education beneﬁts through the Montgomery GI Bill. But a 529 plan can be a great help, meeting education expenses that military beneﬁts might not cover. And the 529’s ﬂexibility means you can transfer funds to another family member. “The Vanguard 529 College Savings Plan from MOAA was simple to complete and fund for my two grandsons.” – LTC Joseph Lee, USA (Ret), Annandale, Va. Anyone can open a 529 savings plan for any beneﬁciary—including you, your spouse, or your children. And you can transfer funds from one beneﬁciary to another, providing The chart illustrates how an earlier start makes it easier to reach your goal, because your money works for you. Note that the chart assumes 5% annual tuition inﬂation, an 8% return on investment, and that the student will be 18 when enrolling in college. Do Your Homework on the Student Aid Process Federal ﬁnancial aid formulas arrive at the expected family contribution (EFC) by considering income, assets, and number of children in school at the same time. There are legal steps you can take to reduce your EFC and improve your child’s chances at receiving more student aid, many of which are at: www.ﬁnaid.org/fafsa/maximize.phtml. TIP All the Money Doesn’t Have to Come From You Thousands of scholarships offering “free” money are available. Begin your research as early as your child’s sophomore year of high school. A good place to start is www.moaa .org/scholarshipﬁnder, a search engine for scholarships, grants, and loans for the military community. Financial aid is typically awarded in one of three forms: Grants They don’t have to be repaid, but grants are typically awarded only to students with extraordinary ﬁnancial need. Campus-Based Aid Programs administered at the school level include Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Work-Study (FWS) programs, and needs-based Perkins low-interest loans. Loans Available through commercial lenders, they include subsidized and unsubsidized Stafford loans, PLUS loans, and professional/graduate student PLUS loans. SPECIAL SUPPLEMENT TO MILITARY OFFICER http://www.moaa.org/529 http://www.finaid.org/fafsa/maximize.phtml

Table of Contents Feed for the Digital Edition of Military Officer - September 2007

Military Officer - September 2007 Contents From the Editor From the President Your Views MOAA Directory Rapid Fire Washington Scene Financial Forum Ask the Doctor Chapter Activities Plan for Your Future At Home in a High-Rise Lone Star Living Common Ground Insert: Community Source Cover Story: Waging War on Disease More Than Beaches MOAA Scholarship Donors Pages of History Faces of MOAA Information Exchange Advertising Index MOAA Calendar Sounding Taps MOAA Member Services Encore

Military Officer - September 2007

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