There are many benefit to 529 College Plans. These college savings vehicles offer excellent benefits for anyone looking to save money for college.
Here are 7 reasons to open an account if you haven’t already:
- Federal Tax Benefits. While you don’t get a front-end tax break on your contributions, all your earnings are tax-free, and are not taxed when they are used to pay expenses.
- State Tax Benefits. Depending on the state you live in, you also may qualify for a state tax break. Currently, over 30 states offer residents either a tax credit or a tax deduction for 529 contributions.
- Owner Has Control. The owner has full control of the funds throughout the life of the account. This differs from custodial accounts in that the beneficiary has no legal rights to the funds in the plan.
- Low Maintenance. 529 Plans are also extremely easy to open and manage. Setup is a breeze as is investing funds. One such option to invest is through an automatic investing plan. Each plan also offers several options to invest in, many of which are professionally managed.
- Simple Tax Reporting. Tax reporting couldn’t be easier. You have nothing to report on any of your contributions. The only time the IRS needs you to report activity is once you start withdrawing funds.
- Flexible. 529 Plans are very flexible, allowing investment options to be changed twice a year. In addition, one tax-free rollover can be made every 12 months.
- Everyone is eligible. These plans are designed with people of all financial backgrounds in mind. There are no income limits, no age limits, and no annual contribution limits.