The Benefits of a 529 College Savings Plan

Sep 21, 2017 | | Say something

Retirement planning is, arguably, the most complicated aspect of any overall individual finance plan. However, designing a proper college investment plan can prove to be rather tricky as well. Gone are the days when education could be obtained for cheap, and even the under-privileged could get into colleges and universities. In the present day world, if you want to provide higher education to your kid, you need to have prudently designed, forward-looking plan in place. A 529 plan is one of the most advantageous of such college education schemes.

Education expenses, as it stands now, are already rather high, and on an upward spiral as well. Indeed, there is no saying where these expense figures would move up to, in a decade or so, when your kid finally is ready to get admission into college. Having an investment plan benefits both the parents as well as their college going child, in this regard. On the one hand, you need not be faced with the sudden financial burden of sponsoring your child’s education, if you have a well-designed 529 college plan to back you up. From your child’s aspect too, (s)he is likely to feel more secure if there are such plans to back up his/her study-related expenses.

Most financial planners are of the opinion that, a 529 college plan has additional benefits to offer, over any other, run-of-the-mill plans. The main advantages of these 529 college savings plan can be explained as follows:

• The earnings accrued from the 529 college investment plan are exempted from all taxes,
• Only parents have access to the fund of this college savings plan. Hence, no money can be frittered away by the kids themselves,
• The funds from these plans can also be withdrawn for other purposes. Hence, sponsoring the studies of your kid is not the sole purpose of the savings plans,
• Contributions to a savings plan can be had from any source,
• As a parent and the holder of these plans, your contributions to the latter need not be, in any way, constrained by your current income levels,
• The money collected through these savings plans can be used at any period of time, irrespective of the age of your child, and
• If some money present in a 529 plan remains unspent, that can easily be withdrawn from the account. No additional penalties need to be paid on these unused amounts either.

The government sponsors the savings plans for college. Hence, these accounts are secure, and act as suitable sources for helping you financially in your efforts to get your child into college. This investment plan, named after the corresponding section number in the IRS code, comes with multifarious additional benefits as well. Open suitable college savings plans for your child, and help him/her attain higher education, without any unnecessary financial concerns either.

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