Education Planning

Invest In A BRIGHTER Future – Scholarships are not a college plan.

Education Planning

Invest In A BRIGHTER Future – Scholarships are not a college planning

The gift of education at any stage of life, whether for a loved one or yourself, is like no other. A tax-deferred plan can aid your sons and daughters in achieving a better future. But unfortunately, the cost of private schools and higher education is rising, and many solutions help you meet the challenge.

529 plans are state-sponsored investment programs designed to help you meet your higher education goals. So if you want to help pay for your child’s college tuition or even the tuition of another family member, 529 plans can help.

The key is to START SAVING EARLY college planning requires a plan since the earlier you start saving, the more time you have to accumulate. There are many saving and financing options to cover college education; at Louis Financial, we can help point you in the right direction.

How much do you need to save for college?

529 plans benefits and features

Tax Advantages

Your 529 plan savings are tax-deferred, which means your savings might grow faster than comparable taxable accounts. Those withdrawals are federal income tax-free when you take money from your 529 plan to pay qualified education expenses.

This includes payments for tuition, room, and board. Some states also offer additional tax breaks, but checking your state’s plans and rules is important.

Contributions

While the IRS sets no specific 529 plan annual contribution limits, states generally limit the total balance within an account to the estimated cost of the beneficiary’s qualified educational expenses. Each state also limits the amount of annual contributions that qualify for tax breaks.

Investment Options

With 529 plans, you have a variety of investment choices that allow you to select a strategy based on your needs and preferences, and the beneficiary’s age. Your investment options will vary based on the specific plan you choose.

What are the different types of 529 plans?

There are two types of 529 plans: education savings plans and prepaid plans.

A 529 education savings plan allows you to vary your contributions. You can use these plans to pay for qualified schools, including colleges, trade schools, and graduate schools.
A 529 prepaid tuition plan lets you “lock in” tuition rates at a specific school through lump-sum or monthly payments.

Under either plan, if the child you originally started the plan for doesn’t go to college, you can use the plan for another child or even to further your education.

What is the benefit of a 529 education savings plan?

By offering a range of benefits including attractive tax advantages and flexible investment options, 529 plans can help you save for tuition and even room and board.