Why choose a 529 account for college savings? Plus, should your initial intended beneficiary become a high school billionaire who either doesn’t need a degree or generously offers to pay for their own with their newfound riches, you’re able to transfer the account to their sibling or other family member for their use instead. Remember that education savings 529s aren’t just for college-related tuition and expenses, but for other kinds of educational tuition, such as private K-12 schools. In an education savings 529, those expenses can themselves be broad, though, encompassing not just tuition but room and board, fees, books, and even technology like laptops, which would be considered “peripheral equipment.”
In most circumstances, there will be penalties and taxes if you withdraw money early or for reasons other than qualified educational expenses. What both plans have in common is that the account holder-whomever opens the account-controls the money. Pre-paid tuition may help your money go further but comes with far more restrictions-still, it may make sense for your family. Prepaid tuition plans are often tied to in-state or public schools, and they allow you to “pre-pay” college tuition at today’s presumably less expensive rates rather than the rates in effect when the beneficiary enters school.Education savings are more common and more for general use, as they can be applied to a wider range of educational expenses.The two kinds of 529 plans you’ll encounter are education savings and prepaid tuition plans.
Check and see if opening an out-of-state plan requires the involvement of a broker, as some will, and check specific requirements of the plan, such as a beneficiary being under a certain age at account opening.īe prepared to pay a fee to begin the account, along with depositing an initial investment. While there are certain advantages to using your state’s plan-including a potential tax break-you may be able to set up a 529 account in another state if it makes more sense for your family and future scholar. Most states have 529 plans and offer you state tax breaks for putting money into these accounts. But you can even open a 529 account for yourself, invest in your future education and enjoy a little bit of a tax reward as you save in the present. Savings accounts for children are a gift that can keep on giving, and the earlier they’re opened, often the better. But even, if you’re a distant relative or a generous family friend, you can open a 529 account for a child-just make sure their parents know. These 529 plans are usually started by a child’s parents or grandparents, with the child as the beneficiary. Turn ideas into reality with Microsoft Excel Learn More Turn ideas into reality with Microsoft Excel
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