529 College Savings Plans are one of the best investments for your children’s education that a parent can make. A 529 College Savings Account is an excellent option for parents looking where to invest in their children. The plan allows parents to contribute after-tax dollars into the account, and the earnings and interest grow tax-free.
They a great investment for parents to make in their child’s education. The plan allows parents to contribute after-tax dollars into the account, and earnings and interest grow tax-free. It also provides excellent benefits such as federal income tax deductions when your family makes contributions.
In 2021, an individual can give up to $15,000 without paying taxes. If the gift amount exceeds this limit then they may be required to pay a tax on it as well. For married couples in 2021, this number doubles and becomes $30,000 if you are giving gifts together with your spouse.
The parent can withdraw the money and earnings tax-free if they are used for a qualified educational expense. Additionally, with a 529 College Savings Plan, the parent retains control over the account. So, if your child decides to skip college, you can transfer the account to another beneficiary.
Tax Benefits of a 529 College Savings Plans
Nevertheless, the benefits are substantial if you concentrate on saving for your children’s education. Even though the amount you contribute cannot generally be deducted from your taxes, some states allow deductions on a portion or the entire amount you put into the plan.
Regardless, the principal is tax-deferred, and any college expense paid with the savings in the plan is tax-exempt. What’s nice about a 529 Plan is the latitude and authority you possess concerning contributions.
The named beneficiary has no privileges in this regard. You can even make a distribution to yourself. Although, the part in earnings of the amount withdrawn will be assessed a penalty and be taxed for income tax purposes. The plan provides tax-exempt money for educational purposes, provided that the money is used solely for that reason.
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Saving for College with Upromise
Upromise is a service that helps individuals save money to pay for college or to pay down existing student loan debt. Upromise is a great way to supplement parents’ and grandparents’ savings and investing in college.
Upromise is a great way to save through partnerships with retailers. Like a cashback rewards card, this plan puts rewards from retailers into an account that you can use to save money for school or pay down current Sallie Mae serviced student loans.
Once you join Upromise, you have to shop at eligible retailers. You can shop online and get anywhere from 1$ to 25% back credited to your account. More than 600 online retailers, including Target and more, will give you rewards that can be used for college and tuition expenses.
The beauty of the Upromise program is that you save money for college by simply shopping at the normal stores you visit every day. Upromise was created in partnership with Sallie Mae and is designed to help save for education costs.