Saving For College With A 529 Plan
This Blog is sponsored by Soundview Financial’s Retirement Savings Guide. Click here to visit Soundview Financial to get access to helpful articles, tips and resources for retirement planning.
With the cost of both public and private colleges increasing, it’s likely that you need all the help you can get to save for a child’s education. A 529 college savings plan offers benefits that few other savings plans match. Any earnings grow tax-deferred, and distributions are federal income tax free when withdrawn for qualified higher education expenses. Remember if you withdraw money from a 529 plan and do not use it on an eligible college expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings.
Under a 529 college savings plan, you may typically choose among several investment options for your contributions, which the college savings plan invests on your behalf. Investment options often include stock mutual funds, bond mutual funds, and money market funds, as well as, age-based portfolios that automatically shift toward more conservative investments as the beneficiary gets closer to college age. Withdrawals from college savings plans can generally be used at any college or university. Remember that investments in college savings plans are not guaranteed by state governments and are not federally insured.
529 college savings plans offer you flexibility and control of your investments targeted for funding your child’s college education. A 529 college savings plan has no income or age restrictions, and savings can be used at most accredited colleges and universities for tuition, fees, room and board, books, and supplies. Plus, the parent maintains control of the account assets, not the beneficiary (child).
Please visit Soundview Financial’s Retirement Savings Guide for a list of Frequently Asked Questions on College Savings Plans and Tips For Choosing College Savings Options.
Also, here is a great podcast on 529 Plan Basics produced by the Securities and Exchange Commission. We would like to thank our friends at SpeakUp Studios for providing the link.
