Parents need to save for college for their kids from a young age. Tuition and fees have been increasing year after year while the economy remains a challenge. With a 529 Plan there are ways to get started on saving up for college expenses.
What is a 529 Plan?
Families can save money through a 529 plan that allows tax-free financial contributions to the plan with the goal of using the funds to pay their child’s college tuition. 529 plans are available in every US state.
Any earnings kept within the 529 plan are not taxed, and all withdrawals for qualified educational expenses are federal income tax-free. These tax advantages can greatly enhance the amount you have to spend on college.
Your 529 plan beneficiary can use the money to pay for tuition, certain housing costs, books, and mandatory fees.
Parent or Student Funded 529 Plan?
Students can open their own 529 Plan, but the benefits are slightly offset by the way your financial aid package is calculated. Student assets are always used at a higher rate than parent assets when it comes to figuring out financial aid.
The 529 College Savings Plan can be funded by parents, grandparents, or anyone else who wants to save for a child’s education. There are no limits on age, income, or relationship to the beneficiary.
College Savings Calculator
