Why is a 529 college savings plan good for you?
Funding a college education is difficult. If you are looking to invest in your child’s education, then you must start doing it now. If you really want to let your child have a better future, then it is must that you start investing in his life today. The best way to do this would be to invest in a 529 college savings plan which is nothing but long-term benefits plan for your child. The US government knows how expensive education could be especially the college phase, therefore, they have introduced a 529 plan which allows you to start saving on a monthly basis in an investment fund to retrieve money later when needed.
To begin with, it will surprise you that the 529 college savings plan is free of taxes. This means that when you go ahead to purchase this savings plan, you do not have to worry about federal taxes and also, keep yourself away from the 1099 form which will only come in use when the time comes to withdraw the funds for your benefit.
Moreover, the plan ensures that you do not have to worry about state taxes. However, there is an exception to this rule. Not all states have made this plan tax free so there are chances that you will need to read up about the states that do not tax you on this plan.
Moreover, if grandparents are giving this plan as a gift to their grandkids, then the plan will not be counted as a part of their estate. Also, grandparents will be able to switch the names of beneficiaries while the plan is active.
The plan is flexible enough that it allows you to make any changes to it or even add or remove the name of the beneficiaries considering you haven’t made any changes to the plan within a 12 month period.
When the students enters college and if there is a need for immediate funds, then this plan also allows withdrawals which saves you from having to arrange for money on an urgent basis. You know how expensive education is and you can give your child this gift something he or she may not treasure or comprehend right away but will certainly realize after they graduate and always value this gift of yours.