Understanding 529 Plans
We all know we should start saving for higher education when our children are born. For families with middle and high school students, saving is even more important. 529 Plans are one vehicle towards this goal. Click on "read more" to learn more about what they are, some advantages and caveats and additional resources.
529 plans have become popular investment tools for parents and others trying to save for post-secondary education. Advantages include being able to select from a wide variety of investment choices, tax free withdrawals when used for qualified higher education, and tax deductible contributions when certain conditions are met. Anyone can open an account. However, neither the principal nor the interest is guaranteed and some states require the use of a financial advisor.
Coverdell accounts are another investment tool. Formerly known as an Educational Roth IRA, investments can be in the form of Certificates of Deposit, mutual funds and other investments. The funds can also be used for elementary and secondary education. However, there is a $2000 maximum contribution per year. For more information, visit www.finaid.org or www.hesc.org.
Note: The above provided is for informational purposes only. Individuals should consult with their accountants and other professional advisors as to what investments they should pursue.