I had talked before about paying your child out of your sole proprietorship and saving payroll taxes, then putting the earnings into a Roth IRA. Up to $5,800 would have no income taxes, and the Roth will be tax free when withdrawn.
This could be a way to save for college. Putting $5800 when your child is 13 is 6 years at 5,800 or $34,800. If it earns 6% a year it will grow to around 43,000. Say college costs are $11,000 per year. You will be able to take that out without incurring the 10% penalty throughout your child’s college time. The distribution is income for getting financial aid, but the Roth IRA itself isn’t an asset on the FAFSA form that most schools use to determine financial aid. It is worth looking into to help with your child’s education. Here is an article about it:
http://www.money-zine.com/Financial-Planning/College-Loan/Saving-for-College-via-Roth-IRA/
If you have children that will go to college someday, now is the time to think of this type of college savings plan. Email me at bstonercpa@sbcglobal.net and we can discuss it. I also have an associate who specializes in college tuition counseling and finding money for college. His name is Michael Budnick and his contact info is:
Michael Budnick, College Tuition Consultant
College Tuition Advisors
2600 W. Olive Ave., Ste 513
Burbank, CA 91505
www.collegetuitionadvice.com
Office 818-333-5099 Direct 818-441-8345
michael@michaelbudnick.com