529 college plans are state sponsored education savings accounts that permits non tax deferred contributions to be made for college education tuition expenses.
Each state will set their own limit for contributions into a 529 plan. The earnings in the investment plan account grow and are distributed tax free when they are used to pay for college or other qualified higher education instutions.
Saving for college can be very difficult for many people. With the cost of housing, taxes and other expenses growing with most people, having the 529 savings plan option can give a family a certain measure of comfort knowing they are saving for college. The amount of money that grows in the 529 will vary with the performance of the investments in the account.
Our financial advisors, planners and broker dealers can provide more information and open a savings plan for you or your child.
Qualified State Tuition Programs
There are 2 types of plansor accounts : a pre paid tuition and a savings plan. Prepaid tuition plans guarantee that the investment will at least keep pace with college education tuition expenses.
529 Savings plans are managed investment funds that can be more flexible. The income in these qualified plans is not taxable. Funds used for college tuitions can be withdrawn and are also not taxable.
Tax free rollovers from one 529 plan to another are allowed for the benefit of the same beneficiary once per year.
Under federal law, college savings are permitted to allow investors to change the
investment options on their existing contributions once per calendar year. Industry observers have criticized
this "once-per-year" rule as too inflexible, especially in a down market year like 2008.
The IRS has recently published a notice addressing this issue. For 2009, according to the IRS, 529 college
savings plans may allow investors to change the investment options on their existing contributions twice per year
instead of once per year. Check with your 529 account to see if it offers this new investment flexibility before you
make any changes.
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- With over 100,000 copies sold, The Best Way to Save for College has become the one book college-bound families and professional planners must have. The Best Way to Save for College is still the number one resource on all 529 programs and other college savings strategies (including Coverdell Education Savings Accounts). Part One of The Best Way to Save for College provides a thorough introduction to 529 plans: diving into their history, mechanics, and giving a straightforward method to use to help decide which 529 plan to enroll in. It wraps up by comparing 529 plans to other popular college-savings strategies - including Coverdell ESAs and U.S. Savings Bonds. Part Two lays out the details of each state's college savings plans. With a brief synopsis of each 529 plan as well as an organized chart of the plan's investment options (where applicable), this section is an excellent quick-reference resource for financial professionals to have on hand when working with clients on saving for college.
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