A 529 plan is a type of savings plan designed to help families save for higher education expenses. Theseplans, which are sponsored by states, educational institutions, and other organizations, offer a variety of tax benefits to help families save for college.
One of the main benefits of a 529 plan is the ability to save for college on a tax-advantaged basis. Contributions to a 529 plan are typically made with after-tax dollars, but the earnings on those contributions grow tax-free. Additionally, withdrawals from a 529 plan are typically tax-free when they're used to pay for qualified higher education expenses, such as tuition, fees, books, and room and board. A 529 plan can also be used to cover qualified K-12 expenses!
Another benefit of a 529 plan is that it offers a wide range of investment options. Some plans offer a variety of mutual funds, while others offer age-based portfolios that automatically adjust the investment mix as the beneficiary gets closer to college age. Some plans also offer FDIC-insured savings options, which can be a good choice for those who are risk-averse. 529 plans also offer flexibility in terms of who can open an account and who can be the beneficiary. Anyone can open a 529 plan, and the account owner retains control of the account and can change the beneficiary to another member of the family if needed.
A 529 plan offers tax benefits, a wide range of investment options, and flexibility in terms of who can open an account and who can be the beneficiary. It is worth considering to plan and achieve your college education goals.
Interested in learning how to superfund your family's 529 plans? Reach out today to find out!