A 529 plan is a great way to prepare for your college education.  While a plan like this is designed for a parent looking to fund his/her child’s education, you’re going to find that anyone can contribute to them.

What makes a 529 plan so attractive?

The cool thing about a plan such as these is that you can get significant tax advantage as well as matching grants and more, making them very attractive.  They are protected from bankruptcy, as well as financial aid calculations.  The pros far outweigh the cons.

How can money be spent?

Once you’re ready to head off to college, the money that has been saved in your account can basically be used for anything.  From tuition to your books and supplies, if you’re going to use that money toward college, the money can be withdrawn with no fees.

What are the advantages?

• #1 High tax deductions – Every state is going to be different with it’s tax rate, but you can see a significant tax advantage regardless of where you live.
• #2 You gain control - Just like a bank account, you’re free to do whatever you want with the money.
• #3 Fantastic way to save – If you’re going to save for either yourself or your child, it’s a great way to invest.  You will not have to report any earnings on the account until you withdraw the money for your education.

What are the disadvantages?

• #1 Can’t invest in a lot – The investments in regards to a 529 are rather limited.  Make sure that you look into how your money is going to grow and if it’s worth it to you.
• #2 Penalties – If you do decide that you’re going to need that money and it’s not going to be related to college, you will receive penalties on that money.

This sounds great!  How can I sign up?

You’re going to want to check with your state.  The easiest way to do this is Google “[your state] + 529 plans”  This is a great way to show you what’s available in your state.  It will also give you directions on how you can sign up.