Developing a smart strategy for college savings is the best way to ensure you can reach your savings goals tomorrow without affecting your financial stability today. A 529 plan is a type of college savings plan that offers a flexible way to save for the costs of higher education. Whether you want to open this type of plan for your child, your spouse, or yourself, a 529 plan allows you to easily save money for college tuition while enjoying federal and state tax benefits.
529 Plan Basics
A 529 plan is a college savings plan offered by a state or specific educational institution. The purpose of this plan is to allow families to set aside funds for college education; these funds can be used by any member of the family and often aren’t subject to a time or age limit. Furthermore, 529 plans often offer tax benefits on any earnings generated, including federal and state tax deductions to maximize the savings you’ve set aside. 529 plans aren’t limited to funding education in your particular state—they can be used to pay for higher education in any state for greater flexibility.
529 Plan Options
There are two types of 529 plans: savings plans and prepaid plans. A savings plan works by investing the contributions you make to generate earnings. These plans function much like a 401(k) or IRA plan and offer a variety of investment options. Alternatively, a prepaid 529 plan allows you to pay for the costs of a future education today; you can pre-pay for education at any public or private institution that offers such a plan.
Financial Directions, LLC can help you open or manage a 529 plan in Tucson to achieve your goals of a higher education for yourself or your family. We can help you evaluate your financial needs to make the best decisions regarding college savings, retirement savings, and more. Take a look through our website for more information about our financial services and solutions, or call us at (520) 408-7777 to schedule a financial meeting.
