Attending and saving for college can be a very confusing process. There are so many plans out there that they function in many different ways. One of the terms you’ll come across is a “529 Plan”. If you’re confused on how the process works or exactly what this plan is, let’s look at exactly what a 529 plan is.
What is a 529 Plan?
A 529 plan is a savings plan ran by the state or your college that is there to help families set aside money for college costs that occur in the future. The reason it got it’s name is because it was named after section 529 of the IRS (Internal Revenue Service)
Why should I look into a 529?
There are a few reasons you should look into a 529 when it comes to saving for college. One of the main reasons is because of the income tax breaks but there are a few more you should be aware of –
- You’re going to pay no taxes on the money you earn in the account.
- The parent will only have control of the account, the child won’t.
- Any person can contribute to the plan.
- There are no limitations when it comes to income.
- Many states have no age limit on when the earnings can be used.
As a parent, it’s never to early to start saving for college. The earlier you start, the better you are. The 529 plan is one of the many savings programs on the market that can help your child’s future. Every plan you come across, you’re going to find the plus sides and downsides. As long as you do your research, any plan is a great plan when it comes to saving for your child’s future.
If you do decide to go with a 529 plan, the plans are going to vary state to state. Using web resources such as savingforcollege.com will help you with your findings. On this type of website, you’re going to be able to see what plans are available in your state along with a rating.
For more information and resources, visit the following websites as well –