Saving for college is a valuable investment in your child’s future. There are many ways to put aside money for education; however, it’s important to choose the right savings option for your needs to ensure you get the greatest return on your contributions. If you aren’t sure which college savings option is right for you, working with a trusted investment planner can help you evaluate your options and your needs to make the right choice.
529 College Plans
529 college plans are state-supported college savings plans that allow you to make contributions toward your child’s educational future that will grow tax-free as long as withdrawals are used for higher education purposes. You can opt to open a 529 plan in any state, regardless of your state of residence or the state in which your child plans to attend college, allowing you to take advantage of the plan that best suits your needs. While the plan must have a named beneficiary, you can change beneficiaries at any time if one child opts out of a college education, allowing you to maintain the savings you’ve gained.
Prepaid College Tuition Plans
A prepaid college tuition plan allows you to lock in today’s educational rates by paying for a portion of your child’s future education at the current date. These plans protect you from inflation and educational cost increases by ensuring you pay a lower rate for your child’s education if you are able to contribute to these costs today, rather than putting them off for the future. Prepaid college tuition plans are state-run college savings plans that offer several tax benefits, but can feature some downsides if your child ultimately chooses a different college than the one holding your prepaid funds.
At Financial Directions, LLC, we are here to help you plan for the future. Whether you want to determine the best college savings option or are looking toward funding your retirement, our Tucson financial planners have the knowledge and the experience to guide you. Please give us a call at (520) 408-7777 or click through our website to learn more.
