529 Savings For Your Child's Educational Needs
A 529 college saving plan is an ideal option for parents who want to ensure a good future for their ward(s). This should not be an end minute choice for students who are ready to step on the doorway of the college. A 529 is a long term saving plan in which people start saving a small amount each month in order to accumulate funds for the college expenses of their child. 529 savings are long term saving instruments for parents to arrange for their wards' money requirements during college years.
529 savings are often managed and controlled by state governments. The rules followed by each plan differ from state to state. 529 savings are either savings for future college expenses or prepaid college expenses. You can choose the one you are comfortable with. 529 plans are also offered by certain educational institutes but these are prepaid plans and not real savings.
The Congress has announced that 529 tax exemptions will be permanent. This is the reason why many college financially helping officers all across the place are in a state of euphoria. Their joy has been augmented by the increasing number of states offering benefactions to 529 savings state tax deductible.
The 529 plans have also come as a boon for some colleges. These plans help the school management to reduce financial aid for students, thereby increasing availability of funds for other expenses.
Parents can get benefit of special tax advantages while taking part in the 529 plan. The plan takes its name from the Section of the Internal Revenue Code where it is found (section 529). The benefits of 529 savings are long term. Contributions to the 529 savings plan are not deductible. However, at the time of maturity, the distributions are tax-free.
There is a general misconception about prepaid 529 plans. It is that prepaid 529 saving plans are only for people who wish to send their children to in-state schools. This notion prevails because 529 savings are sponsored by the state. But it is not true. Reality is that if you choose a 529 prepaid saving plan then the amount in your account can also be transferred to any private or an outside state educational institute. However, the amount may not be the full amount of the prepaid 529 contract.
If your child is still very young, don't wait for him to grow up to start saving for his/her educational needs. Start investing in 529 savings and secure the future of your child.