Today’s fantastic family finance article is:
Do you know what a 529 is?
Don’t be embarrassed if you don’t. A recent Edward Jones survey says you’re in good company. It estimates 3 out of 4 Americans don’t know about the tax-advantaged college savings plans set up by Congress back in 1996.
If you’re a parent, it’s time to get a clue about 529s though. Why?
- Tax free growth. The investments in a 529 account grow tax free.
- Tax free withdrawal. No taxes are due on withdrawals if used for qualified college expenses for the beneficiary — like tuition, room and board, or even a computer.
- State tax benefits. Some plans include special state tax benefits like being able to deduct contributions from taxable income.
- Flexible assignment. Funds can be reassigned to qualifying relatives of the beneficiary — like a sibling.
Those are 4 good reasons to start doing some research if you have (or are related to) any kids who will be heading off to college someday.
Is a 529 plan the perfect savings vehicle for your kid’s college future? Probably. But you’ll never know if you don’t learn what one is.
Get tomorrow’s tip here.