529 Tax Benefits And Other Features
A 529 plan is one of the most brilliant ways to save for your kid's future study needs. A 529 plan will let you help your ward to pay for the expensive college phase of his/her life. Special federal tax advantages make a 529 plan a very logical and smart way to save money for college education.
Unique tax advantages of 529 plans:
* Tax deferred augmentation If you are saving your money in a 529 plan then your earnings grow tax deferred and you can also reinvest your money. This helps in building your savings over a period of time.
* Tax-free distributions You can get distributions for qualified educational expenditures like fees, books, tuition, boarding charges, etc. Any earnings are also free from tax.
Whether you are saving money for your kids or even your own educational needs, you want your hard earned money to be invested in a good saving plan. An ideal plan should be able negate the impact of omnipresent inflation. The hike in education costs should be met by the returns of your investment plan. A 529 tax plan is one such investment plan that can allow you to achieve the same.
529 investment plans have been referred to as obsolete by some financial planners. This is because of the reason that lately there is poor performance of these plans. Additional to this, the educational costs are increasing at an alarming rate. According to them, investments, then, made to these plans are not able to attain their objectives.
But many people who have invested in these plans have a different opinion all together. They believe that these 529 tax plans are wonderful. They give the following reasons for this:
* No tax is certainly better than low tax. * Getting the money back in your college fund is a marvelous thing. * Many people do not wish to micromanage their account in college.
If you also agree to the above mentioned points then a 529 tax plan is certainly your best option as a saving plan for college education. 529 plans are no doubt the best investment plans for each and every college saver. If not on the top of the list, they can be placed high on the list of alternatives of investment. Some people may not find it the best choice but a 529 plan is high on the list because it is difficult to beat the federal tax benefits offered by it.
If you have decided to invest in a 529 plan, then the decision pertaining to investment plan you want to opt for is solely yours. Within each investment plan there are several options to choose from. To choose the best, you need to decide what are your needs and objectives.