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