Investing For College

Think of us As your Investing for College Tutor

Discover effective planning and investing strategies for higher education

Investing for college can be daunting. We'll guide you through all the investment choices designed to help take you where you want to go. Explore the choices and considerations you’ll want to weigh when developing your strategy to invest for college.

Setting aside funds for higher education can create a brighter future for you or a loved one, but deciding how to go about investing can leave you guessing. If you are setting aside funds specifically for education - then vehicles like the Lumentrades 529 College Savings Plan and Coverdell Education Savings accounts offer tax deferred or even tax-free growth so you can maximize your potential savings. Whichever approach you select, it’s important to remember that starting early and contributing even just a little bit can help you reach your goals faster.

There are a number of choices available for those seeking tax-efficient accounts specific to education. These include the Lumentrades 529 College Savings Plan, Coverdell Education Savings accounts, and UGMA/UTMA Custodial accounts.

529 Plans

Sponsored by individual states, these college savings plans offer a level of flexibility and potential tax advantages that can make them a great choice for the right investor. Benefits of a 529 plan vary from state to state. Details of the Lumentrades 529 College Savings Plan include:

  • The account owner maintains control over the account, even if the beneficiary decides not to go to college
  • Allocate assets based on risk tolerance or child’s age
  • Contribute $400,000 in a lifetime per beneficiary
  • Contributions and earnings grow federal tax-deferred and funds withdrawn for qualified higher education expenses are completely free from federal income taxes
  • Some states may offer tax benefits to in-state residents
  • Invest as much as $15,000 per year per child, or $75,000 in a single year, without incurring federal gift taxes

Learn more about the Lumentrades 529 College Savings Plan’s benefits and choices available to you as a Lumentrades client.

These accounts offer federal tax-free earnings and withdrawals on qualified expenses such as tuition, books, computers, and room & board. While 529 Plans are used exclusively for college, Coverdell Education Savings accounts (ESAs) can be used for elementary and secondary schooling in addition to college. Additionally, there are no minimum contributions, and account owners can contribute up to $2000 per child per year.

See if Coverdell ESAs are right for you by exploring more account details.

Custodial accounts provide a way to build assets for your children or loved ones future, and let you to manage a minor’s assets for their benefit. As you build a portfolio, with or without assets from the minor, you will be the guardian of the account, managing it until the minor reaches the age of majority. From the start, the account will be held under the minor’s name and Social Security number. Once they are old enough, they will assume control of all assets.

Learn more about the tax benefits and details of custodial accounts.

See below for a side-by-side comparison of 529 Plans, Coverdell ESAs, and UGMA/UTMA Custodial Accounts.


529 Plans Coverdell ESAs UGMA/UTMA Custodial Accounts

Is there a contribution limit?

Yes (Varies by state)

Yes ($2,000 per year)


What’s included in “qualified expenses?”

Tuition, fees, books, school equipment, school supplies, room & board for college only

Tuition, fees, books, school equipment, school supplies, room & board for all levels of education

Any costs that benefit the minor for education-related or other costs

Are qualified expenses taxed?

No (Federal tax-free, State taxes may apply)

No (Federal tax-free, State taxes may apply)

Yes (Investment income is subject to federal income tax, possibly at child rate)

Can you change the beneficiary?




Are there any income limit restrictions?


Yes (Ineligible if your Adjusted Gross Income is $95,000-110,000 for single filer; and $190,000-220,000 for joint filers)


How is the account treated for estate tax purposes?

The value of the account is removed from the account owner’s taxable estate

Contributions are treated as completed gifts from the contributor to the beneficiary

The value of the account is included in the custodian’s taxable estate

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