A 529 plan is used to save for college. It provides tax advantages so that people are encouraged to save for their (and their children’s) future.
Any taxpayer in the United States can start a 529 plan. You can set up as many plans as you want. Many parents start a 529 plan for each of their children. Since it is your plan, you will be in charge of it until you withdraw it, allowing you to determine how it is used.
There are two types of 529 plans. The 529 College Savings Plans continues to grow and can be used for all expenses including tuition and room and board, as well textbooks. If you need to buy a computer for your studies, you can use your 529 for that.
The 529 Prepaid Plans allow you to pre-pay (or at least get a head start on) your tuition. The nice thing is that you are able to pay the current tuition, not the cost in a few years!
Not only will your investments grow, any withdraws that you take are federally and state tax exempt in most states. Since these plans are sponsored by states, state agencies, or educational institutions, college choice may be important. You generally have to choose which state it will be used in.
You are able to choose a different state than the one you live in currently. However, there may be even more tax benefits for choosing your current state. Your state may help to grow your 529, as long as you keep contributing money to it.
As college expenses continue to grow, you might want to look into starting a 529 to help your children be prepared for the future!
Tax Tips for the Self-Employed
Do You Need to Send Out 1099s?
Checklist for Maintaining Your Limited Liability: Avoiding Piercing the Corporate Veil
Why Small Businesses Need a CPA
The New Tax Brackets for 2019
How Tax Reform Will Affect Your Business Meals and Entertainment