Thursday, March 20, 2014

What You Need to Know about 529 Plans


The 529 plan is the one of the most popular college savings vehicles. 529 plans offer federal and in some cases, state tax advantages, as well as providing tax-deferred growth options for savings. These plans offer great benefits, but are complex. Listed below are some things you need to know before opening a 529:
1.      Some plans are pricier than others. There are prepaid plans that allow families to buy “units” of tuition at rates similar to today’s pricing, and also savings plans that allow families to invest in preselected investment portfolios that follow the pricing of the markets. It is important to consult a professional to determine which type of plan is best for your family.
2.      These plans do have a risk factor. Many of the 529 college savings plans contain mutual funds that are tied with stock and bond markets, which means that families could potentially lose money if their investments take a hit.
3.      Your state might not offer the best deal on 529 plans. All 529 plans offer federal tax advantages, but only certain states also offer state income tax deductions or credits. Consult with a professional to discuss the pros and cons of opening a 529 plan in your state.
4.      529s impact financial aid. Money invested in a 529 plan will impact your federal financial package, but not as much as funds stored in other types of accounts. Take this fact into consideration when opening your 529 plan.
If you have any questions about 529 plans, please contact us!
518 Arbor Hill Rd.
Kernersville, NC 27284
 Ph: 336-996-3338
 
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).
 
 

No comments:

Post a Comment