529 Accounts Can Pay For Your College NeedsCollege education has become very costly these days. Statistics reveal that the costs of higher education have increased at a faster rate than the rate of inflation in the last three years. Some say, going for higher education has indeed become a privilege for a selected few. But the situation is not that bad. With right savings and investments, you can secure prospects for future education of your child. Take for example a 529 plan. With a 529 account, you can successfully save for your wards college education. 529 accounts offer a scheme in which parents or guardians can avail a tuition plan for their children's education. These accounts are prepaid accounts where you, as the parent, pay for your child's education a long time before s/he joins the college. 529 accounts are managed in a very economical manner. An advantage of 529 accounts is that you do not need to pay taxes on the interest accrued. You can select between a 529 prepaid plan and a 529 college savings plan. The 529 prepaid plans are bound to only select schools while a 529 savings plan is a more flexible option. 529 accounts can be used for paying college fees and other costs like books, computers, boarding charges, lodging charges, school supplies and other such expenses. 529 accounts serve the purpose better if opened when the child is young. This is because many investment companies offer marvelous benefits in such plans; and when you start saving at an early age, you can save enough for your childs future needs. Also, if you compare 529 accounts with other conservative plans then you will find them a better option. In case you already have a 529 account, you can be assured that you will not have to pay federal taxes for all your withdrawals up to the year 2010. After 2010, the US Congress will decide whether to extend the tax-benefit or not. The Congress can stay with the present rule or can take some alternative route; but only time will tell that. So, if you want to fund your ward's future education, then one of the best ways to do so is with a 529 account. But before you put your hard earned money in to a 529 account, be fully aware about the functioning of the account, rules of operation and the intricacies that are built in to it. You should invest in them only after gaining complete and proper information about them. The functioning of a 529 account is such that you pay for your child's higher education much before (s)he reaches the college. This means that you start paying for his college education years before (s)he goes to college. This way you can ensure your child's higher education. Looking at the mounting cost of gaining education in a college, many parents revert from the idea of providing their ward with higher education. But with 529 accounts they can realize their dreams comfortably and easily. |