Even in tough economic times, college graduates still fare better than those with a high school diploma or even an Associate’s degree .
A college degree is still a fantastic option to help your child enjoy his or her own economic security and prosperity.
But with so much to consider, (your retirement, house payments, car payments, etc…), what are some options for saving for your child’s education?
A 529 plan is offered by the state as a savings plan or by an educational institution as a pre-paid plan.
A 529 savings plan is a state-sponsored tuition program designed to provide tax incentives to encourage families to save for the high cost of a college education.
Please consider, before investing, whether your home state offers any state tax or other benefits that are only available for investment in your state’s qualified tuition program.
Other benefits may include reduced or waived program fees, matching grants, and scholarships to state colleges. Certain states may impose a penalty for ‘non-qualifying’ withdrawals and if you were able to deduct the original contributions on a state income tax return, there may be a state “recapture” of income tax due.
A 10% federal penalty on earnings will apply if you receive a non-qualified withdrawal. Any state-based benefit offered with respect to a particular 529 college savings plan should be one of many appropriately weighted factors to be considered in making an investment decision.
You should consult with your financial, tax or other adviser to learn more about how state-based benefits (including any limitations) would apply to your specific circumstances and you also may wish to contact your home state or any other 529 college savings plan to learn more about the features, benefits and limitations of that state’s 529 college savings plan.
If you’d like more information on how to prepare for college in the most tax-efficient way possible, then contact us today for your complimentary, no obligation 60 minute wealth management consultation.
 “Benefits of College Degree in Recession are outlined,” New York Times Online, January 9th, 2013 http://www.nytimes.com/2013/01/10/education/study-shows-college-degrees-value-during-economic-downturn.html?_r=0