College 529: Powerful Tool To Save Money For College Tuition
Planning for a child or grandchild's education isn't simple. Today's options must be chosen carefully keeping in mind family income and other factors. The best way to help meet these costs is to create a strategy to fund college education. College 529 savings plans are a marvelous tool for parents to save money for the education of their loving children. The U.S. Congress has created a powerful way to save for your child's education. With the tax changes enacted in June 2001, all other savings option for education pale in front of the benefits of a 529 plan.
There are two different types of College 529 investment plans. One is state college saving plan and another is prepaid tuition plan.
The state college saving plans is named after the IRS tax code which governs them. These investment plans are more delightful siblings of prepaid tuition plans.
Prepaid plan allows you to pay today. This means that you can pay at today's tuition rates for the school tomorrow. College 529 savings plans are more flexible now. The money that you will get can be utilized at any school you choose. Also the money for expenses related to higher education like boarding charges, lodging charges, fees, books etc. can be met easily. This is not so with a prepaid plan.
A College 529 investment plan is a quite easy and simple method to save money for your childs future education. Few of the benefits of a college 529 plan are as below:
* You don't have to pay any tax on your account's earnings. * The total control of the account in with you and not your child. * In case the child for whom you were saving doesn't wish to go to college then you can roll over the account to some other member of the family. * Any person can put the money into the account. * People of any income group can take this college 529 plan. There are no income requirements that make you ineligible. * Many states do not employ any age limit for using the account. * If your ward gets any scholarship then the money which is not used can be taken out of the account.
FAST FACTS of College 529:
* The earnings that you get from a college 529 plan are exempted from federal taxes. * The withdrawals are also not taxed till the time they are utilized for paying the education costs of a college. * Most of the States employ very renowned investment companies to regulate their 529 accounts. * If the money is withdrawn from the account for some purpose other than education then these earnings are subject to ten percent penalty together with federal tax.
In a nutshell, College 529 plans have revolutionized how American families save and pay for college education of their wards.