The following is printed from www.sitfunds.com
The following is printed from www.sitfunds.com
The chart below provides a brief overview and summary of your options available through Sit Mutual Funds.
| UGMA/UTMA* | Coverdell Education Savings Account | |
| Maximum Annual Contribution | No limit, but more than $12,000 will trigger gift tax. | $2,000 until the minor turns age 18. |
| Income Limits on Contributor | None. | Phases out for single filers at $95,000 to $110,000; for joint filers at $190,000 to $220,000 |
| Tax-deferred Growth | No. Earnings are taxed at the child's or parents' tax rate. | Yes. |
| Tax-free Withdrawals | No. All withdrawals are taxable | Only withdrawals used to pay for qualified education expenses are federal income tax-free |
| Who Controls the Account? | The custodian (usually a parent), but only until the child reaches the state's age of majority | The "Responsible Individual" (usually a parent). |
| Can the Minor on the Account be Changed? | No. | Can usually be transferred to a member of the same family without penalty. |
| Impact on Federal Financial Aid | Considered a student asset and generally assessed at 35% | Considered a parental asset and generally assessed at up to 5.6% |
| Estate Planning Features | Assets are transferred out of the donor's estate. | Assets are transferred out of the donor's estate. |
| Offered by Sit Mutual Funds | Yes. | Yes. |
Call 1-800-332-5580 to talk with an Investor Services Representative.
* The Uniform Gift to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) provides an alternative for structuring accounts owned by children. Most states have adopted one form of these uniform acts as a means of transferring property to children. The property need not be used on education.
** The law allowing for federal income tax-free withdrawals is set to expire on December 31, 2010. Congress may or may not extend this law beyond that date.
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