The Education 529 Savings Plan
The Best Little Savings Account You'll Ever Open
What is a 529 Savings Account, anyway?
This savings plan allows families to easily save money for their children's future higher education costs. The great thing about the Education 529 plan is that it provides account holders an opportunity to wisely invest for these future expenses on a tax-advantaged basis. If you are looking for a way to slowly invest in your child's college expenses, without breaking your bank, then this is a great plan to use.
Benefits of an Education 529 Savings Plan
There are many appealing advantages when it comes to the Education 529 Plan, including:
Penalty-Free Withdrawals
In the event of a death, disability or scholarship of the beneficiary, money from the plan can be taken out with no penalty to the beneficiary.
Asset control
The 529 plans don't automatically transfer of control to the beneficiary at a certain age.
This plan lets the account owner keep control for the life of the account, if need be.
Multiple uses for assets
The assets of the plan can be used to pay for many costs associated with higher education, such as: room and board, tuition, fees, books and many supplies for any post-secondary accredited schools in the U.S.
That means any technical school, 2 or 4 year schools, professional schools and any graduate programs.
Flexible beneficiary designation
The plans can be opened for just about anyone you want: children,
grandchildren, other relatives and even friends.
Open to contribution from anyone
That means that anyone that wishes to contribute to the fund can do so, including: relatives and friends.
Tax Advantages
One of the best advantages of investing in a 529 Education Savings Plan is that you can do so without any tax penalties until the money is withdrawn from the account. The plans also qualify as a gift-tax exclusion.
What You Need to Know
- If the beneficiary decides to not attend college, or is unable to for a variety of reasons, you can appoint a new beneficiary for the account to any adult or child family member of the original beneficiary. This includes, brothers, sisters, nieces, nephews, aunts, uncles and even you.
- The account holder maintains complete control over the account at all times. Gives you the right to change the beneficiary at any point and to withdrawal funds at any time.
- Once the account is turned over to the beneficiary regardless of maturity of account or death of account holder, it is looked at as a "gift" and the account holder is not responsible to pay taxes on the account.
- You can make contributions regardless of your income level. There are no limits placed on contributions to the 529 Education plan.
- The limits placed on the balance of a 529 Education Savings Plan accounts are pre-determined by the Internal Revenue Service.
- You can take money out of the account at any time, for anything you wish. Keep in mind, though, that if they are not used for higher education expenses, it will be reported to the IRS and you will be expected to claim it and pay taxes on the account.
- The beneficiary will not be penalized if he/she should obtain a scholarship. You can take out as much money that the scholarship is worth with no penalty.
Bottom Line
It is very important to begin saving immediately for your child's higher learning costs. The 259 Education Plan is the perfect way to invest without having to worry about penalties and taxes until the account is used. You can invest as little as $25 a year or as much as $100,000. And anyone else that wants to make a donation can do so as well!