529 Tax

Best 529 Plans And Accurate Record Keeping

You are planning on your first child or maybe you already have a couple, either way it is time to start saving for your child's college fund. I know what you are thinking; they're too young or what if my child doesn't want to go to college.

Both of these thoughts are simply not true. You know how hard it is to get a decent job now without a college degree. Can you imagine what its going to be like when they are our age? They will need to have some sort of training in a serious degree to have a decent future.

So now that you know it is a very real necessary, it's time to start looking into your options. One option is the 529 College plan. This is a savings plan set up by the state to help save for college. This type of savings will have certain tax breaks involved, as long as the guidelines are followed.

A 529 Plan can be categorized three ways, one is a prepaid plan, the next is a savings plan, and the third is a combination of both. Each state determines which types of plans are available. Many colleges can offer 529 savings plan but not the 529 prepaid.

You can transfer your 529 prepaid plan from one state to another, sometimes with a slight difference in the amount of money available. The 529 savings plan is good at any recognized college and in university both in the country and some foreign ones as well. With tax laws changing, many higher education schools can offer their own 529 prepaid plans. These new laws also allow for both plans to be treated the same and on your child's scholarship and financial aid forms, these are also not held against the child since it is not their money but yours.

There are four really great things about the 529 plan. One, you get very nice income tax breaks. Next, you keep control of the account, not the person you are setting it up for. Third, it is very simple to get started, just fill out the easy enrollment form and make your first contribution, or even go with automatic payments.

Fourth, everyone can participate in the 529 plan. You can add very large amounts to it, even over $300,000 per child. There are no income limitations involved and you can even use it for yourself. Oh, and one more nice feature is that if the person you set it up for decides not to go to college, you can use it for another family member.

There are other ways to save for your child's college fund such as a savings account at your local bank. Then we also have the Coverdell Education Savings Accounts, U.S. Savings Bonds, Section 222 Deduction, and student Loan Interest Deductions.

You also have the UGMA, Life Insurance policies that are permanent and whole. Then, of course, the Federal Tax Incentives such as the Hope Scholarship Fund and the Lifetime Learning Credit.

Not saving for your child's future education is not only wrong but cheating him/her as well. With such great plans and ideas like the 529 Plans, there really are no more excuses, so go out and pick one already.

529 Tax