Navigating Kindergarten Choices: A Guide to School Selection and Funding - Kaytlin Hall

Fall means back to school for families with school-aged children. This can be both an exciting and overwhelming time, especially for those starting school for the first time or a new school. Fall also means the start of what feels like a new part-time job, the search for the right kindergarten.

The process of finding a kindergarten seems to be just as complicated and stressful as choosing where I was going to go to college. There are public schools, charter schools, magnet schools, private schools, religious-based schools, etc.

Public school is the most economical since tuition is free. There can be before and after school costs which can be accessible for some qualifying families, up to $600/month.

Charter schools, although public, do get a lot of extra funding through fundraising and individual parent donations. Annual donations can range from $1,000 to $2,000 per child.

There is a wide range of costs for private schools. Religious schools on average range from $10,000- $15,000 a year. A non-religious private school can be as much as $40,000 per year or higher.

There are a few ways to pay for school.

• 529 - A 529 is traditionally used for college savings. This account is set up by an adult with the minor as the beneficiary. Even when the beneficiary turns 18, they have no legal right to the money in this account. The gains are tax-free if used for qualifying education expenses. Anyone can contribute to a 529 plan (parents, grandparents, friends, etc.). Annually, $10,000 can now be used to pay for tuition expenses at elementary or secondary public, private, or parochial schools.
• Coverdell - An education savings account created for a beneficiary who is under 18. Like the 529, the gains are tax-free if used for qualifying education expenses. The total maximum contribution per year for any single beneficiary is $2,000. There are also income restrictions. Individuals with a modified adjusted gross income between $95,000 to $110,000 (and between $190,000 to $220,000 if married filing jointly), may contribute but will be limited to under $2,000 a year. Once over $110,000 for individuals or $220,000 for married filing jointly, you may not be eligible for a Coverdell. Once the minor turns 18, no new contributions can go into the account. The funds must be used, moved to another education savings account, or changed to a different beneficiary by the time the original beneficiary turns 30.
• UTMA - Uniform Trust to Minors Act, is a custodian account set up for a minor. The adult manages the account until the minor reaches a certain age (usually 18 or 21). The funds in this account can be used to pay for education or anything else as long as it benefits the child. The taxes on a UTMA are different than the Coverdell and 529. In 2023, the first $1,250 of unearned income is tax-free. The next $1,250 is taxed at the child’s tax rate, and income over $2,500 is taxed at the parent’s tax rate.

The choice between public or private depends on every family and every child. There are pros and cons for both options and the financial decision behind it is essential.

Sources:

Gerber Kawasaki Wealth & Investment Management is an investment advisor located in California. Gerber Kawasaki Wealth & Investment Management is registered with the Securities and Exchange Commission (SEC). Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Gerber Kawasaki only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Gerber Kawasaki Wealth & Investment Management 's current written disclosure brochure filed with the SEC which discusses, among other things, Gerber Kawasaki Wealth & Investment Management's business practices, services and fees, is available through the SEC's website at:?

IAPD - Investment Adviser Public Disclosure - Homepage .Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.

The projected rates of return included in this presentation are hypothetical returns and are provided for illustrative purposes only. Accordingly, no assumptions or comparisons should be made based upon these returns. Hypothetical returns are subject to inherent limitations. One limitation is that the returns do not take into account the impact that market and economic risks, such as defaults, pre-payments, and reinvestment rates, may have on actual trading.