Most parents have high hopes of sending their children to college. But for many parents, coming up with the capital at the time the child turns 18 can feel like an impossibility. Indeed, the average cost of going to college in the United States is $10,116 per year at a public, in-state college and over $36,000 per year at a private college, according to a recent US News report. That’s a lot of cash.
Fortunately, there are plans for saving that are designed to help parents save up for their kids’ college education in a way that is feasible and tax-advantaged. One way to save for your child’s college education is with a 529 plan.
According to Investopedia, a 529 plan is a type of tax-advantaged savings plan that’s specifically designed to help parents pay for college. While the plan was originally only intended to pay for higher-education costs (such as enrollment in a university), today, the plan can also be used to cover K-12 education costs.
Once a 529 plan is established, the money within that plan can be used to pay for education costs. The two types of 529 plans are:
In addition to helping you grow your money for your child’s education, there are also some tax benefits of a 529 plan. For example, you’ll benefit from:
Establishing a 529 plan may be a smart and manageable way to start saving for your child’s education now, especially if you’re a new parent. To learn more about 529 plans, financial planning, and preparing for the future, reach out to one of our Certified Financial Planners™ at Harvest Wealth Partners today.
Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
Harvest Wealth Partners is committed to helping our clients work towards a successful future. We believe in your potential to understand the financial options that can lead you to your goals. Call us today to partner with our team. We look forward to continuing our mission for years to come.
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