Consider making your child’s future education costs a priority

Investing in your child's education now could help prepare you for those expenses later by saving in a 529 College Savings Plan.

Saving early can help you later

If you're like many parents, you want your child to go to college. Paying for their education however, can be a huge financial burden. As tuition costs climb each year, saving early is an important step for parents. Fortunately, there are some college savings plans you can take advantage of that will help you save for your child’s education.

Invest in your child’s future

It’s difficult to think ahead to high school graduation when your child is still young, but it really helps to get into smart savings habits early. The more time you give yourself to save, the better prepared you and your child will be. One of the smartest ways to save for education expenses is by putting your money in a 529 savings plan.

A 529 plan is a college savings account that has many benefits. Earnings on contributions are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board at an eligible education institution and tuition at elementary or secondary schools. Contributions to a 529 plan, however, are not deductible. Think about it. Money that has the potential to grow over time may reduce the need to borrow and pay interest on education loans.

Did you know? ABLE Account

The 529 college savings plan is a plan that can grow with your child. If an unexpected life event such as a diagnosed disability occurs after you begin saving with a 529 Plan, you now have an added option. The ABLE Act, a law signed to help those parents, allows you to roll over funds for that child from a 529 Plan to a 529 ABLE account. The ABLE account must be for the same beneficiary as the 529 account or for a member of the same family as the 529 account holder.

If you haven’t already started saving for your child's future education, the longer you put off planning for education expenses, the more of a challenge they may become.

 

 


Nothing contained herein should be construed as (i) an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. An investor's or a designated beneficiary's home state may offer state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state's qualified tuition program. You should consider this before investing. The tax information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. Investments in 529 plans are subject to investment risks, including the loss of the principal amount invested, and may not be appropriate for all investors. Earnings component of non-qualified withdrawals may be subject to federal and state taxes and the additional federal 10% tax.
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