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A 529 College Saving Plan For Your Childs Education

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Save Now To Counter Higher Education Costs

I guess we all know what it means that primary and middle schools are crowded and getting over crowded all across the country. It means that colleges and universities will get more competitive or more expensive, or both, by the time these kids are ready for higher education.

I’ve been advising families for over 25 years on college savings, but parents now have the most challenging set of circumstances I’ve seen. Higher education costs are sure to continue rapidly higher while these parents are faced with the need to save for, possibly, 100% of their retirement needs, while costs rise on nearly everything else. At the same time, long term employment and benefits are less sure than they have been in two generations.

Starting a 529 College Savings Plan early in children’s lives can reduce a big chunk of this anxiety. I’ve seen the relief in young parents’ eyes when they’ve finally established 529 plans for their children. Then, usually, more good news follows when one set of grandparents, and then the other start contributing.

It truly is surprising how rapidly 529 College Savings Plans can grow with consistent contributions. 529 plans can be started with a very minimal amount of money, as little as $25. The important thing is to get started as soon as you can. (The IRS says the easiest time to get a social security number is when you are filling out the birth certificate information.)

The Compelling Features of 529 College Saving Plans:

Tax advantages. Earnings grow tax-free and withdrawals from a 529 College savings plan for qualified higher education expenses are free from federal tax. Tuition, room and board, and required books and supplies are all qualified higher education expenses.

Can be used for any accredited college, not just schools in the state that sponsors your plan. Includes undergraduate, graduate, post-graduate and technical training.

Anyone can contribute to your child's 529 Plan - parents, grandparents, uncles and aunts, other family members and friends.

Up to $12,000 per person a year in contributions allowed ($24,000 for married couples) without gift-tax consequences. Or, under a special election, up to $60,000 ($120,000 for married couples) can be contributed at one time by accelerating five years' worth of contributions. Any additional contributions made during the next four years will reduce the taxpayer's lifetime gift-tax exemption of $1 million.

No income limits. You can contribute to 529 college saving plans no matter how much you earn.

Ability to save for anyone, your child or grandchild, a niece or nephew, a friend or yourself. You can even change beneficiaries within the same family.

Control of assets. You decide when to make withdrawals. You can move your assets once a year or when you change beneficiaries.


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