Setting aside funds for higher education can create a brighter future for you or a loved one. Vehicles like the 529 College Savings Plan offer tax deferred or even tax-free growth so you can maximize your potential savings. Whichever approach you select, it’s important to remember that starting early and contributing even just a little bit can help you reach your goals faster.
529 Plans
A 529 Plan is a great way to save for college and gain tax benefits. It allows you to save for college while your money grows tax-deferred. The 529 Plan is designed to meet the needs of virtually every family and every budget.
There is no minimum annual contribution required with a 529 Plan.
What is a 529 Plan? Section 529 college savings plans are established by states under section 529(b)(A)(ii) of the Internal Revenue Code as “qualified tuition programs” through which individuals make investments for the purpose of accumulating savings for qualifying higher education costs of beneficiaries. Sponsored by individual states, these college savings plans offer a level of flexibility and tax advantage that make them a great option. Benefits of a 529 plan vary from state to state.
Details of a 529 College Savings Plan include:
*The account owner maintains control over the account, even if the beneficiary decides not to go to college
*Allocate assets based on risk tolerance or child’s age
*Contribute $360,000 in a lifetime
*Contributions and earnings grow federal tax-deferred and funds withdrawn for qualified higher education expenses are completely free from federal income taxes
*Some states may offer tax benefits to in-state residents1
*Invest as much as $14,000 per year per child, or $70,000 in a single year, without incurring federal gift taxes2
Start investing for your child’s college education today