EDUCATION SAVINGS PLANS

Investing Previous Childcare Expenses

Childcare expenses may be unavoidable. But once your child begins elementary school, you may experience a significant increase in discretionary income — and a great opportunity for investment.

When your child starts school, consider beginning an investment program using the money previously spent on childcare. There are a number of investment opportunities available that also offer tax advantages while you accumulate funds to help pay future education expenses. These include the Coverdell Educational Savings Account (ESA) or a state 529 plan.

Open an Account

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Coverdell Education Savings Account (ESA)

You may make investments on a regular basis and contributions for the current year may be made until the tax filing deadline for that year (generally April 15 of the following calendar year). The annual ESA contribution limit is $2,000 per beneficiary. In addition, approved expenses are generally federal income tax free. State Farm Mutual Funds® may be a great choice for funding an ESA due to investment minimums that are among the lowest in the industry.

State Farm College Savings Plan

You and your spouse may each contribute up to $14,000 per beneficiary annually without triggering gift taxes.1 Contribution limits are set by the state of Nebraska and are subject to change. Contributions can be made until the value or total amount of contributions for the beneficiary reaches $360,000. There is no income limit for contributors. In addition, approved expenses are generally federal income tax free.

Many more investment opportunities are available through your registered State Farm® agent. Take a moment today to speak about your options. Simply click, call, or stop by an office in your neighborhood to learn about the options you have in preparing for your child's educational future.

1 The annual gift exclusion allows an individual (donor) to give up to $14,000 ($28,000 for married donors) each calendar year per individual recipient without incurring a federal gift tax liability.

Risk Disclosures

Investing involves risk, including potential for loss.

Before investing, consider the investment objectives, risks, fees and expenses associated with The State Farm College Savings Plan. Contact State Farm VP Management Corp 800-447-4930 for an Enrollment Handbook and Participation Agreement containing this and other information. Read it carefully.

An investor should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.

AP2013/11/2171

Not FDIC Insured

  • No Bank Guarantee
  • May Lose Value