The 529 Education Savings Plan Facelift
Friday, May 9th, 2008The 529 Education Savings plan is a star player- at least in the world of college financial aid. The 529 is a college-savings plan- but you don’t have to do any of the saving. Your parents do. And you’re not the only one getting a good deal.
The 529 is tax-advantaged, which means the money isn’t taxed as long as they are used for higher education. They have exploded in popularity in recent years. Contributions to 529 plans jumped last year after Congress in 2006 made the tax benefits permanent. By the end of 2007, money in 529 Savings Plans rose to $111.9 billion from $90.7 billion.
With college tuition constantly rising, parents are looking for better ways to save. And they’re in luck.
529 Plans have just got another boost. They now have lower fees and better investment options.
Many states used to offer plans through a broker that added extra costs. But competition has prompted some states to seek out new program managers, cut fees and sweeten state tax breaks. Many get an additional state tax break if they invest in their own state’s plans. But not all 529 plans in each state are created equal. For instance, The 529 in Illinois made the best savings plan list, while Nebraska and Ohio made it onto the worst list with higher costs. Still, the 529 facelift is revamping how you save for college.
This is not your parents’ saving plan….oh wait, it is!
