Education IRAs. You can contribute up to $500 per child per year, which is deductible from federal income taxes. Not available to single parents earning $110,000 or more or married couples earning $160,000 or more.

529 Plans. Much higher contribution limits, depending on the state in which the plan was established. In Pennsylvania, the maximum account size is $300,000 per child. Earnings are not taxed. The parent, not the child, has control of the account. More than one person can contribute to the account. Amounts above $11,000 per child per donor may be subject to the federal gift tax. In some states, contributions may be partially deductible from state income tax.

Uniform Gifts to Minors Act (UGMA). You can also give funds directly to your children or grandchildren under the Uniform Gifts to Minors Act (UGMA). This reduces taxes on earnings, because they are taxed at the child's lower rate. For example, you can purchase mutual funds on the child's behalf. If the child has no other income, often the income is not taxed at all. Unlike 529 plans, however, gifts under UGMA belong to the child and cannot be returned to the giver. The child gains access to the funds at age 18.

Securities and insurance products are offered through Univest Investments, Inc., member NASD/SIPC, a licensed subsidiary of Univest Corporation of Pennsylvania. They are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of principal amount invested.