A college education is becoming increasingly required in the modern workforce, and this trend is expected to continue for years to come. In addition, there is also an increase in the cost of college. From tuition, books, to room and board, costs are increasing all over the board. Saving money early on is the smart choice to make. A 529 Savings Plan is just that.
A 529 plan is a college savings plan that offers financial aid and tax benefits. There are two types of 529 plans: college savings plans and prepaid tuition plans.
• College Savings Plans – A 529 college savings plan is similar to a Roth 401(k) in that you invest in mutual funds or other similar investments using your after-tax contributions. This means that the amount of money you have in the plan fluctuates based on the performance of the investment options that you chose. Generally, the investment options chosen are well-reputed investments. This means that most investors see a positive return.
• Prepaid Tuition Plan -Given in the name “prepaid” it means you are paying early. This type of plan allows you to pay for the entire or part-of an in-state public college education. You may also be able to convert this to use for an out-of-state or public college depending on what college it is.
529 plans, especially the college savings plan type, works similar to investments. Investing now means more potential gain than investing later. As stated earlier, the costs of college are rapidly rising as is the need for a college education. A 529 plan can help pay for tuition, books, supplies, computers, equipment, and sometimes even room and board. Learning options early and starting plans now can mean saving a lot of money in the future.
For more information, contact us. Our professional consultants are readily available and can provide financial information that can benefit you.