529 Plan: A Savings Plan for Education. What happens to a 529 account when the child turns 18? When the child reaches age 18, the account is still owned by the parent or other account holder, but the child is considered the account beneficiary. The account can be used for qualified education expenses at any eligible educational institution. Can I use 529 to pay off student loans? Yes, you can use 529 to pay off student loans, but there are a few things to keep in mind. First, you will need to have enough money in your 529 account to cover the entire balance of your student loan. Second, you will need to make sure that the 529 account is designated as a "qualified tuition plan" in order to get the tax-free treatment of the withdrawal. Finally, you should check with your loan servicer to make sure that they will accept a 529 payment.
Why is a 529 such an advantageous way to save for college?
There are a few reasons why a 529 savings plan is such an advantageous way to save for college:
1) The earnings on your 529 savings plan are not subject to federal income tax, and in some states, may also be exempt from state income tax.
2) With a 529 savings plan, the account owner ( typically a parent or grandparent) maintains control of the account and can withdraw the funds at any time for any reason.
3) 529 savings plans have high contribution limits, often around $300,000, which allows you to save a significant amount of money for college.
4) 529 savings plans can be used at any accredited college or university in the United States.
5) 529 savings plans can be used for a variety of college expenses, including tuition, room and board, books, and even computers.
Overall, a 529 savings plan is a great way to save for college because it offers a variety of tax breaks and benefits, and can be used at any accredited college or university in the United States.
How much should you put in 529 each month?
The answer to this question depends on a number of factors, including the age of the child and the expected cost of college. However, as a general rule of thumb, experts recommend saving at least $200 per month in a 529 plan. This will ensure that the account grows sufficiently to cover the costs of college.
What's the best way to save for child's college?
There are a few things to consider when saving for college.
First, start saving early. The earlier you start saving, the more time your money has to grow. Even if you can only save a small amount each month, it will add up over time.
Second, consider using a 529 plan. A 529 plan is a tax-advantaged savings plan that can be used to save for college. Contributions to a 529 plan grow tax-free and can be withdrawn tax-free as long as they are used for qualified educational expenses.
Third, take advantage of any employer matching programs. Many employers offer programs that match a portion of employee contributions to a 401(k) or other retirement savings plan. If your employer offers such a program, make sure to take advantage of it.
Fourth, invest in yourself. One of the best ways to save for college is to invest in your own education. If you can get a higher paying job, you will be able to save more money for college.
Finally, remember that there are other ways to pay for college besides savings. You may be able to get financial aid or take out loans. Don't let the cost of college deter you from getting the education you want.