How Do I Know if a 529 Plan is Right for Me?
It’s never too early to begin thinking about ways to save for your children’s college education. One of many plans available that you may not be aware of is a 529 plan. The 529 is an education savings plan operated by a state or educational institution designed to encourage savings for future college costs. Like all things, it has its advantages and disadvantages.
529 Savings Plan Benefits
This plan may be beneficial to you for the following reasons:
- Regardless of age, anyone who plans to attend an eligible postsecondary education institution can be a beneficiary
- A state income tax deduction may be taken for the funding of the 529 plan
- A qualified distribution can be taken without federal income tax or penalty for qualified education expenditures
- Assets grow tax free
The following are potential downsides to the plan:
- A change to the investment option is only available one time per year
- These plans are subject stock market volatility
- May decrease your child’s eligibility in need-based financial aid
While a 529 plan can be an advantageous way to save for college, make sure you know the potential risks before you create a fund. See the following article for more information: http://www.latimes.com/business/la-fi-college-529-20111218,0,485132,full.story
If you have questions or need assistance in determining if the 529 plan is right for you, please contact Anders or your tax advisor.