What Is A 529 College Plan?
Have you ever wondered how much it is going to cost you when your child reaches the age for college? The prediction is that college education, a decade from now, is going to cost thousands of dollars. The obvious thing to do then is to save money from now. But then the burden of taxes comes into the forefront. The good news is that there is a solution. And this solution is called 529 College plan. What is 529 College Plan?
It is a tax advantaged plan that allows you to save money for your child's higher education that too tax free. That means that you do not have to pay any taxes for the money you invest in the 529 college account. The only clause is that the money has to be spent only ob college education and nothing else. If the money is not spent on college expenses then a 10 % penalty would be levied on it. If the beneficiary, your child, ultimately decides not to attend college at all then the 529 college account can be transferred to any other member of the family. Siblings, spouse, in-laws relatives, it can be transferred to anyone. But the only thing is that the money must be used only for qualified educational expenses. What are these qualified educational expenses? Tuition fees, study material, computers, hostel fees etc, all these fall under qualified educational expenses. Then the 529 college plan does not affect your child's financial aid much and if your child is able to secure a scholarship then the 10 % penalty is also waived. All these benefits have made the 529 college plan the most ideal college plan of today's times to invest in. 529 College plan is the most ideal plan that has ever been formulated. It is a powerful tool devised by the US congress to promote higher education among US citizens. There are more than 70 529 College Plans to choose from. And one can get a plethora of information from websites or even brokers. Almost each US state today has a 529 plan. Most states don't even require you to be a resident of the plan you invest in. Anyone can invest in a 529 plan. There are no restrictions in terms of income and age. People of any economic condition can invest in a 529 plan as investment can go very high and as low as $15 per month. You can even invest for yourself if you plan to go to college in the future. So if you are planning to save for your child's higher education then you must consider a 529 college plan and secure your child's future. |
