For some parents, college can end up costing as much as a second home. When there are two, three or four kids to put through college, the total bill can be mind-boggling.
One point most experts agree on is that the best way for parents to save for college is usually through a college 529 plan.
“A 529 college savings plan specifically designed for education savings is considered the most effective vehicle compared to other education savings accounts,” says Jane Wollman Rusoff of Research Magazine.
Using a 529 plan is typically a much better option than relying on minor’s accounts (UTMA or UGMA), Roth IRAs, or 401(k) borrowing.
529 College Plan Advantages
The best 529 plans are low cost and easy to set up, whether by parents or grandparents.
Contribution limits are high, and the gifting family member retains control of the assets until they’re eventually used.
They offer unbeatable tax advantages, from tax-free growth to state income tax deductions in many states.
A wide range of investment options are available under most 529 plans, and the plans don’t disqualify students from receiving financial aid.
529 plans can cover college tuition, room and board (including off-campus housing), books, fees, and computers if required by the school.
Financial Planning Tip: There are about eighty-five college 529 plans being offered (more than one per state). One of the ways we can make college savings easier for our clients is to help them select the best 529 plan for their needs, monitor the investments, and calculate how much to save.