Demystifying College
Savings Plans

Planning for your children’s education doesn’t need to be frightening or overwhelming.


Start preparing when your children are young.

Setting aside as little as $50 a month can help build thousands in savings.
But even if your children are older, you still have opportunities. You
simply need a solid plan, one that’s easy to stick with. 

Choosing the right plan.

You’ve heard of the various ways to save money for your children’s education,
but it can be confusing. 529 Plans, educational IRAs, Coverdell savings accounts,
pre-paid tuition programs, an UTMA trust account. 
Which is right for your family today? And will it still be your best option five years from now? 

Let us help you with some of the basic myths surrounding college savings.

What’s keeping you from getting started now? Maybe you’ve gotten some well-intended, but incorrect information from others.

MYTH: If my child doesn’t go to college, I lose the money in the account.

REALITY: You will not lose the money. There are options. You can:

  • Pay for vocational school or other eligible post-secondary education
  • Change the beneficiary to a sibling or other qualifying family member who will attend college
  • Use the money to pay for your own education
  • Save the funds for a future grandchild

MYTH: I will earn a better return if I just invest money in the stock market.

REALITY: You should think about a college savings plan the same way you would your retirement.

The further your children are from college, the more time you will have to ride out market turbulence, allowing you to take on greater risk. However, the portfolio should begin to shift to one that is more conservative as your child gets closer to college age. In most cases, 529 Plans have investment options available and the reallocation to a more conservative position is inherent.

MYTH: Funds in college savings accounts can’t be accessed if there is an emergency.

REALITY: Nearly every 529 Plan allows you to withdraw your funds at any time and for any reason.

However, you are subject to tax and a penalty, typically 10% on the earnings. Typically, though you cannot redirect funds in UTMA/UGMA accounts, making the 529 Plan unique.

MYTH: The more I save, the less financial aid my child will receive.

REALITY: Actually, depending on a parent’s age and income, the money saved in a qualified educational plan, such as a 529 plan, will not affect a child’s financial aid eligibility. 

Saving for college is achievable.

Let one of our experienced financial education experts help you find solutions and give you reassurance along the way by explaining the options available to you and helping you develop a plan. Call 833-619-1272 to schedule your conversation at your convenience. We’re available weekdays, evenings, and even weekends. Let’s talk, over the phone, or face to face virtually. The choice is yours.

Understanding College Savings Options

529 Plans

Legally known as a qualified tuition plan, this tax-advantaged savings plan is designed to encourage saving for future education costs sponsored by states, state agencies, or educational institutions and is authorized by Section 529 of the Internal Revenue Code.


PRO: Typically there are no income limits or restrictions based on age and contributions grow tax free if used for educational expenses; in most instances, you also get an extra deduction each year on state taxes.


CON: Some state plans restrict how you can control the account.


Education IRA

Similar to 529 Plans with some exceptions, this education savings account, formally known as a Coverdell savings account is used to pay for children's educational expenses.

PRO: You can save up to $2,000 a year per child and funds grow tax-free.

CON: If your adjusted gross income is $110,000 ($220,000 for joint filers) or more you are ineligible this type of account.


These custodial accounts, known as Uniform Transfer to Minors Act (UTMA) or Uniform
Gift to Minors Act (UGMA), are typically set up by adults for minor recipients and serve as trusts that hold assets during the recipient’s childhood. Assets can include cash, stocks, bonds and others. The account—principle and investment return—becomes the property of the recipient between the ages of 18 and 21.

PRO: Parents who contribute receive a tax advantage; best for those who want to save money for their children but don't want them to have access to the cash until they are adults

CON: The recipient, once of legal age, can use the money for anything, not just education.

Investment and Insurance Products: • Are NOT Deposits • Are NOT FDIC Insured • Are NOT Insured By Any Federal Government Agency • Have NO Bank Guarantee • May Lose Value​​​​​
Brokerage services and insurance products are offered by M&T Securities, Inc. (member FINRA/SIPC), not by M&T Bank. M&T Securities is licensed as an insurance agent and acts as agent for insurers. Insurance policies are obligations of the insurers that issue the policies. Insurance products may not be available in all states.
Investing involves risk and you may incur a profit or a loss. Asset allocation does not ensure a profit or guarantee against loss.