529 Savings Plans were created by Congress in 1996. There are two types of 529 plans, a tuition prepayment plan and a savings (really an investment) plan to which you contribute money to be used later to pay for a student’s qualified education costs. The tax-favored plan option is the more popular choice. As long as the money in the 529 Plan is used for education, you do not pay taxes on the money. If you open a 529 state-sponsored plan most states offer a state tax deduction on the contributions.
Consult with your financial advisor before opening the plan.
If you have any questions about the education options we have shared this month, please feel free to contact our office.