5 College Savings Alternatives to 529 Plans

Taxable Account
Taxable accounts have no contribution limits and can be invested broadly in stocks, bonds or mutual funds. There are no direct tax benefits but you can save on taxes by investing in an index fund.

Kiss Trust
This is an irrevocable trust that is designed to earn a large sum of money over the lon -term. Even the most modest gift can grow into hundreds of thousands of dollars over time with the compounded growth in a Kiss Trust. These accounts can start at birth and mature over time until the child is retirement age, if desired. A gift of $2,500 to a small child, for example, has a projected value of $1.3 to $1.5 million by the time the child reaches age 65 because of the compounding interest set up in this type of trust. The funds can be taken out at college age as long as the trust is set up that way at inception. These funds stay in the donor’s name, so they never adversely affect the student’s financial aid consideration. A Kiss Trust can be invested in a tax-deferred annuity or an after-tax mutual fund.

Infinite Banking
Under this concept, loans are taken out from whole life insurance policies to fund college tuition for beneficiaries. The beneficiary is not taxed and there is no adverse affect on financial aid consideration because it is not in the student’s name.