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Saving for College Costs

1 minute video: What's the Best Way to Set Aside Funds for Future College Costs?


Saving for College Costs.

One way to plan for your children's college education is through a 529 plan which is an education savings plan operated by a state or educational institution. The name 529 comes from section 529 of the Internal Revenue Code which created these types of savings plans in 1996. Although contributions are not deductible on your federal tax return, your investment receives tax-deferred treatment and qualified distributions to pay for the beneficiary's college costs. Qualified withdrawals come out federally tax-free, non-qualified withdrawals are subject to federal and state income tax and a 10% penalty.

College savings plans offered by each state differ significantly in features and benefits. The optimal plan for each investor depends on his or her individual objectives and circumstances. In comparing plans, each investor should consider each plans investment options, fees, and state tax implications. State tax deductions vary by the state of issuance. Plan assets are professionally managed either by the state treasurer's office or by an outside investment company hired as the program manager, but you have some control over how your investment is managed. You may be able to change to a different option in a 529 savings program every year although plan restrictions may apply.

Everyone is eligible to take advantage of a 529 plan and the amounts you can contribute are substantial. The availability of tax or other benefits may be conditioned on are subject to enrollment, maintenance, administrative, and management fees, and expenses per beneficiary. Plans can vary greatly and care should be given to fully understand your 529 plan before you invest

This video and text is for information use only and is based on information believed to be true. Much of the information is readily available, but text is drawn the Video: from the video and text is for information use only and is based on information believed to be true. Much of the text information is readily available, but most of the material is from the above video produced by FAclient. The reader acts on these ideas at their discretion and should consider consulting an accountant, financial advisor, or attorney. No promise is made that an idea or concept is appropriate or would work well for the reader. This is not an offer to provide legal advice or act as an attorney. Contact Steven Erickson JD, MBA, CFP(R), Accredited Wealth Management Advisor, Chartered Retirement Planning Consultant at 573-874-3888 This email address is being protected from spambots. You need JavaScript enabled to view it. , if you have questions or to set an appointment. Serving Clients in Columbia, Jefferson City, and the surrounding counties.

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