Tip of the Month

February 2010

Start Saving Today for Your Child’s Tomorrows

Minivan, highchair, and diapers, oh my! There is nothing more unexpected then expecting. Just when you thought you thought of everything, another need-to-know tip becomes a need-to-have accessory.

College seems so far away, but saving now will be one less thing to worry about in the future and the most important thing you can prepare for!

Did you know Service 1 FCU can help you start saving today for your child’s future education? Our Coverdell Education Savings Account is a great way to start preparing for the future, whether your child plans on attending a secondary school, university, or community college, you’ll both be prepared.

Basics regarding distributions from Coverdell Accounts:

• Distributions are tax-free as long as they are used for qualified education expenses, such as tuition, books and fees.*
• There is no tax on distributions if they are for an eligible educational institution. This includes any public, private or religious school that provides elementary or secondary education as determined under state law.*
• The hope and lifetime learning credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits.*
• If the distribution exceeds education expenses, a portion will be taxable to the beneficiary and will be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship.*

Click here for more information on our Coverdell Education Savings Accounts.

Remember to open an Astro Kids Club Account for your little one. Today is the best time to start saving for tomorrow.

*For more information on potential tax deductions, contact your tax advisor.