5 Reasons to Start a 529 College Plan Today
A 529 college savings plan is one of the easiest ways to save for your college education or your child’s college education. The benefits of this plan are tremendous.
Here are five reasons why you need to start one today.
1. Pay No Taxes
In most states, the 529 college plan is tax free. Earnings are tax deferred and withdrawals are exempt from federal tax when used on education expenses. So you earn more with the money you place in the account. This means that you have a higher potential of saving money through a 529 plan than through traditional investment/savings accounts. Some states even let you deduct a portion of your contribution into the plan from your state taxes.
2. No Income Eligibility Requirements
Other educational savings accounts typically have some sort of income eligibility requirement, limiting your ability to fund the account if you make too much money. Not so with the 529 college plan.
3. Anyone Can Fund the Account
There are no restrictions as to who can fund the account. Once the account is opened, anyone can deposit money into the account. Also, you can open the account for anyone. The account owner always has full control over where the money is spent.
4. Really Flexible Options
The 529 college plan comes with very flexible options. In most states, there is no time limit as to when the money is to be used. So if you plan on attending college later than usual, the account can still be used then. Also there is an option of rolling the account over to someone else in the family. The only restriction of the account is that it must be used to on qualified educational uses - like tuition, books, supplies, room and board, etc.
5. Automatic Investing
The great thing about the 529 college plan is it comes with an investment manager from the start. You don’t have to pay attention to how the stock market is doing and you don’t need to carefully plan out which investments you want to make. It is all done for you. What a great way to go.