Every parent wants their child to go to college but in most instances, parents don’t have the money to pay for the tuition fee and other associated expenses. However, even if money is tight, you are not out of options as there are several plans in the U.S that you can use to fund your child’s education and improve your family’s living standards. One of these plans is the 529 plan and today we are going to look at why it is so important and what are its benefits.
529 plan is a plan especially made for education savings. It is operated by an educational institute or a state. It was made to help families save money for their children education. The plan got its name from 529 section of Internal Revenue Code. It was established in 1996 and is known to be very flexible. You can easily start a 529 plan with as low as $25. Here are some of the benefits of the saving plan:
- If you are living in New York, this plan can be purchased by Ohio. Your child will be able to use this to attend college in California.
- Depending on what state you live in, you could get some tax breaks too.
- 529 plan puts the power in your hand. You are the only one in control of the funds. The beneficiary named for the account does not get any rights to use the funds. You are the only one who decides where and how to use the funds.
- 529 plan also simplifies tax reporting because you will not be required to report anything other than taxable and non-taxable earnings for the year you make the withdrawals from.
- You can change the beneficiary of the account at any given time. So if one of your children does not want to attend college, you can easily shift that fund for any other family member.
If you want more information on 529 plans offered in your state, you should search on Google using the term ‘529 plans *your state name*’ or ‘College Savings Plan Comparison’.
|Tags: account, beneficiary, California, child, college, education, money, name, New York, Ohio, plan, state, tax, U.S.|
|Posted in Personal Finance|