State budgets are being slashed left and right. One of the things states tend to cut are funds intended for state universities. The school then has no recourse but to increase tuition rates. Across the nation we are seeing tuition rates on the rise, thus it is never too early to start saving for your kids college education. This article will discuss the benefits of the 529 College Savings Plan and how it can make saving for college a bit easier.
Tax Benefits
The federal tax benefits you will receive is the first thing you will want to know about. This plan is known to offer some of the best federal tax breaks available. While the contributions you make are not deductible as far as federal goes the good news is that the investment becomes tax deferred and all of the distributions that will pay for college work out to be tax free. This benefit was made permanent back in 2006.
Control
The second you thing you want to know is who keeps control of the funds. Luckily you do.Very rarely does the beneficiary ever have direct access to any of the funds. You make all of the decisions. You decide when and if money is withdrawn and what for. Some of the plans will even let you take back your funds for whatever reason you decide. However be aware that there are always penalties to such an action so don’t do it unless it’s an emergency. Compared to other plans this savings plan gives you a little bit more control.
Flexibility
One of the things that makes this plan so popular is of course the flexibility. Most of the 529 College Savings Plans allow you to switch to different options within the plan mid stream if you’d like. You could even roll it over in to a completely different plan providing certain requirements have been met. Also pretty much anyone can start a 529 plan. There are no age restrictions or income levels required.
Part of the Ethernity
