College Savings Plan of Alabama Helping Parents Save For College
College Saving Plans - 529 Plan Options and Facts
What is a 529 plan?
A 529 plan is a state-operated investment plan that offers families a federal, tax-free strategy for saving money for school. Authorized by Congress in 1996, 529 plans are officially referred to as qualified tuition programs (QTPs). 529 plans have become among the most popular selections for families saving for any child's higher education. 529 savings plans are a good way to save for college and so they offer great regulations. Though 529 plans change from one state to another, all of them are exempt from federal taxes, and that can give a genuine bottom-line boost for your college fund. College Savings Plan
529 Plan Options
529 plans are available in two varieties: (1) college saving plans, and (2) prepaid tuition plans. Many states offer both options but every state has a minumum of one of the options. College savings plans let parents use their plan funds for school expenses at any college. Prepaid tuition plans let parent's lock-in future tuition at in-state public colleges at present prices.
Tax Deferred Plan
529 Plan Facts
Earnings from your 529 plan are exempt from federal taxes, just like any withdrawals, as long as they go toward paying college costs.
Some states waive state taxes for residents, other states allow deductions on contributions.
529 plans have generous maximum contribution limits -- some as high as $250,000 per beneficiary.
Most states hire experienced investment companies, such as TIAA-CREF to handle their 529 accounts.
If funds are withdrawn for purposes other than education, the gains are susceptible to a ten percent penalty as well as federal taxes. States may assess their very own penalties.
Great for grandparents: 529 contributions are considered completed gifts and so are excluded out of your estate. Grandparents may also switch beneficiaries with other grandchildren.
Note: Each 529 plan features its own set of rules and restrictions, that are at the mercy of change. Ensure that you request the newest plan details from plan administrators.
What is a 529 plan?
A 529 plan is a state-operated investment plan that offers families a federal, tax-free strategy for saving money for school. Authorized by Congress in 1996, 529 plans are officially referred to as qualified tuition programs (QTPs). 529 plans have become among the most popular selections for families saving for any child's higher education. 529 savings plans are a good way to save for college and so they offer great regulations. Though 529 plans change from one state to another, all of them are exempt from federal taxes, and that can give a genuine bottom-line boost for your college fund. College Savings Plan
529 Plan Options
529 plans are available in two varieties: (1) college saving plans, and (2) prepaid tuition plans. Many states offer both options but every state has a minumum of one of the options. College savings plans let parents use their plan funds for school expenses at any college. Prepaid tuition plans let parent's lock-in future tuition at in-state public colleges at present prices.
Tax Deferred Plan
529 Plan Facts
Earnings from your 529 plan are exempt from federal taxes, just like any withdrawals, as long as they go toward paying college costs.
Some states waive state taxes for residents, other states allow deductions on contributions.
529 plans have generous maximum contribution limits -- some as high as $250,000 per beneficiary.
Most states hire experienced investment companies, such as TIAA-CREF to handle their 529 accounts.
If funds are withdrawn for purposes other than education, the gains are susceptible to a ten percent penalty as well as federal taxes. States may assess their very own penalties.
Great for grandparents: 529 contributions are considered completed gifts and so are excluded out of your estate. Grandparents may also switch beneficiaries with other grandchildren.
Note: Each 529 plan features its own set of rules and restrictions, that are at the mercy of change. Ensure that you request the newest plan details from plan administrators.