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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
July/August 2026
Financing Your Child's College Education
August is the most popular month for births, and the month most students head off to college. So what better time to think about how to finance your child's higher education? A 529 plan may come to mind first. But other alternatives might better align with your financial strategy and goals.
Roth IRAs
While Roth IRAs are primarily retirement accounts, you can also tap them for education expenses. Roths offer tax-free growth, and you may be able to withdraw your contributions penalty-free.* If used for qualified education expenses, earnings can be accessed tax-free when certain conditions are met.However, the current $7,500 annual contribution limit for Roth IRAs might not meet your family's educational expense needs. And that limit is phased out at higher modified gross income levels. In addition, Roth withdrawals can affect your child's financial aid eligibility.
Life Insurance
An enticing aspect of life insurance is the tax benefits it may offer. The cash value of whole or universal life insurance policies grows taxdeferred. That value may be accessed through loans or withdrawals, potentially without triggering tax implications.** Note that the insurer will reduce your policy's cash value and death benefit if you don't repay the loan, but that's not necessarily a drawback if the policy is purchased primarily for college savings. If you die, the policy's death benefit ensures that your children's educational expenses will be covered.But be aware, the performance of the policy's cash value hinges on market conditions and the insurance company's investment decisions. In scenarios where market performance is lackluster, the expected cash value growth may not materialize, diminishing the effectiveness of this funding strategy.
Custodial Brokerage Accounts
A custodial brokerage account is essentially an investment account managed by an adult— typically a parent or guardian—on behalf of a minor. Once the minor reaches the age of majority, they gain full control over the account's assets. These accounts are governed by the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Act, depending on your state. Custodial brokerage accounts offer a broad array of investment options. Also, within limits, these accounts are generally taxed at the child's presumably lower tax rate. However, the account may affect their eligibility for college financial aid.Before you begin an education savings plan, talk with your trusted professional. They can help you weigh the pros and cons of different strategies, keeping your family's unique needs in mind.
*To qualify for tax and penalty-free withdrawals of earnings, a Roth IRA or Roth 401(k) must be in place for at least five tax years, and the distribution generally must take place after age 59-1/2, except for qualified education expenses.
**A taxable event may occur if tax-free loans are taken and the policy lapses. Loans and withdrawals from life insurance policies classified as modified endowment contracts may be subject to tax when the loan or withdrawal is taken, and if taken before age 59-1/2, a 10 percent federal tax penalty may apply. Withdrawals and loans reduce the death benefit and cash surrender value.
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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
Meaglia Financial Consulting and LTM Marketing Solutions, LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Marketing Solutions, LLC, an unrelated third party. Articles are not written or produced by the named representative.
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