By Patrick Amey
As a financial planner, I can’t begin to tell you how many questions I get about college saving strategies, particularly 529 plans. And it makes sense, these plans vary by state, the potential tax can be confusing, and people often feel very strongly about whether or not to participate. Plus, the tax deferred nature of 529 plans combined with compound growth can be very powerful for those who are saving for college. Here’s my quick 4-point speech on 529 plans:
- Just like retirement, starting early has a huge impact on the result.
- Find out if your state offers tax credit or tax deductions for 529 contributions. More than states offer either tax credits, which can be very valuable, or deductions against your state tax income. These can help leverage your contributions for college savings.
- Does your state require you to contribute to the state’s plan in order to receive the tax deduction? If so, you are likely going to want to contribute to your state’s plan.
- If there is no deduction in your state’s plan or other advantages, you’ll want to compare plans on which is best in terms of performance and fees. Several plans stand out from the rest. Many publications offer great good reviews and ratings along these lines.
For recommendations about your child’s 529 plan, schedule a meeting by clicking below, contact Patrick Amey –pamey@makinglifecount.com, or call (913) 345-1881.