Saving for college seems to be on the minds of all parents today. With the cost of college tuition and schooling expenses are always on the rise, parents are getting more stressed over whether they are saving enough for their children.
Over the last couple of years, it has been reported that many parents are successfully saving for their child’s college fund by using supplemental programs. One of the such state program that has helped parents save and plan for their child’s college expenses are the 529 plans.
What is a 529 plan?
The 529 plan is a state-sponsored plan and investment program. The state is going to be the one setting up the plan with an asset management company that it chooses to use. The parent is then the one that has to open the 529 account. In many cases, the parent is going to be the owner of the account, but the child that the plan was set up for is the beneficiary.
On the plus side, the parent is not going to have to deal with the state in any way. They are going to be dealing directly with the assessment management investment company that they were set up with.
There are many benefits to opening a 529 plan for your child and their education.
- The account owner (the parent of the child) does not have to pay any kind of income taxes on the account. This includes the accounts earnings as well.
- The parent or the owner of the account is the one that has complete control over the account. The child or the beneficiary never does.
- If the beneficiary or the child that the account was set up for does not end up going to college for some reason, the account can be transferred to another child in the same family.
- Anyone can contribute to the plan. That includes grandparents and other family members and even friends.
- No one is ineligible for a 529 plan.
- There is no amount or income limitations.
- You can withdraw funds from the account at any time without having to pay any kind of penalty.
Of course, there are other means of saving for your child’s college education. You can simply open a checking or savings account that is interest bearing so you can save for your child. You may also consider purchasing a CD to help you save for your child’s education.
Despite all the options, don’t discount 529 plans. A college education is one of the most important things in the world. As such, consider consulting with an accountant as they may know of some extra things that you can do in order to get the most money saved in the most amount of time.
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