Now that the school year is coming to an end all across the U.S., parents of children of every age may have thoughts of future college days and how they will pay for them. Starting to save for college right now is your best option. Waiting even one day more decreases your chance of having enough money to send your child to the college of his choice. One saving option you may have considered is a 529 plan. How much do you know about 529 plans? Here are the basics:
- 529 plans were designed as educational savings plans by the Internal Revenue Service (named after section 529 of the Internal Revenue Code). These plans are operated by the state or educational institutions.
- 529 plans were developed in 1996 and have helped many families since save for their children’s future education.
- 529 plans are available in different states and can be used in all different colleges.
- Contributions are not tax deductible, but earnings are not taxed and will not be taxed when withdrawn for college.
- Most 529 plans are “set it and forget it” meaning once you set one up, you can have the funds automatically deposited periodically through your bank.
- There are no age limits, income limits, or annual contribution limits making 529 plans very flexible.
- You can change the beneficiary of your 529 plan at any time.
- Many schools accept 529 plans. You can find the school of your choice by using this form: http://www.savingforcollege.com/eligible_institutions/
- You can start a 529 plan through many different sources, our agency being one of them.
- You can make changes to your 529 plan up to twice a year and roll over your 529 to another 529 plan once a year.
To learn more about 529 plans, please call us. We can offer you assistance in starting a 529 plan for your children’s college future.
