Advantages And Disadvantages Of 529 Plan
Q: Should parents invest in the 529 College Plan?
When couples bring home their bundle of joy, the last thing on their mind is college. In all actuality, this is the perfect time to start thinking about investing in the college education because it’s here before you know it. There several ways to invest for college, one being the 529 College Savings Plan. This savings plan was executed in 2006, the legal name being “Qualified tuition program”. The 529 plan is a savings plan operated by the state or educational institution that has a designated beneficiary, which can be your child or grandchild.
The 529 plan is used to pay for college or other post-secondary certifications. There are two types of 529 plans, prepaid tuition and savings. Below is a list of the advantages and disadvantages of this investment plan:
Advantages:
• There are federal and tax benefits each year that you contribute to the plan.
• The cost of electronic devices needed for college can be withdrawn from the plan without being taxed.
• Students enrolled in 529 can receive favorable treatment when applying for federal financial aid.
• If the student receives a scholarship, you can withdraw the amount equal to the scholarship with no tax penalty.
• You can change the beneficiary without being penalized.
• The contributions made …show more content…
If the plan is started as early as the beneficiary’s first birthday, there should be enough funds to cover undergrad expenses. One thing to consider when setting up the 529 plan is that it gives you an option to invest as little as you want on a monthly basis without having a significant impact on your monthly expenses. As the cost of college tuition rising and some states eliminating their state scholarship that meet certain academic criteria, someone needs to invest in a child’s future and the 529 plans helps do this
When couples bring home their bundle of joy, the last thing on their mind is college. In all actuality, this is the perfect time to start thinking about investing in the college education because it’s here before you know it. There several ways to invest for college, one being the 529 College Savings Plan. This savings plan was executed in 2006, the legal name being “Qualified tuition program”. The 529 plan is a savings plan operated by the state or educational institution that has a designated beneficiary, which can be your child or grandchild.
The 529 plan is used to pay for college or other post-secondary certifications. There are two types of 529 plans, prepaid tuition and savings. Below is a list of the advantages and disadvantages of this investment plan:
Advantages:
• There are federal and tax benefits each year that you contribute to the plan.
• The cost of electronic devices needed for college can be withdrawn from the plan without being taxed.
• Students enrolled in 529 can receive favorable treatment when applying for federal financial aid.
• If the student receives a scholarship, you can withdraw the amount equal to the scholarship with no tax penalty.
• You can change the beneficiary without being penalized.
• The contributions made …show more content…
If the plan is started as early as the beneficiary’s first birthday, there should be enough funds to cover undergrad expenses. One thing to consider when setting up the 529 plan is that it gives you an option to invest as little as you want on a monthly basis without having a significant impact on your monthly expenses. As the cost of college tuition rising and some states eliminating their state scholarship that meet certain academic criteria, someone needs to invest in a child’s future and the 529 plans helps do this