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Finances in 55 Seconds: Looking for a 529 Plan
Posted By Miranda Marquit On 07/11/2011 @ 12:06 pm In Investing | 4 Comments
As you probably know, the cost of education is rising. I look at what I paid for undergraduate tuition and grad school, and what my husband paid in tuition increases to finish his Ph.D., and I realize that the cost for my son to attend college in another eight or nine years could very well be prohibitive. This is why we’re already saving up for college.
One of the tools you can use to save up for college is the 529 plan . This college savings plan provides a way for you to use investing and the power of compound interest to build up enough for college. As long as withdrawals from the plan are used to pay for qualified education expenses, there are no taxes paid on the earnings from the plan. (You should be aware, though, that you contribute with your after-tax income, so there is no federal tax break for your contributions. Some states, though, offer you a break on state income taxes for your contributions to a 529.)
If you are interested in using a 529 to help your child save up for college, here is a guide to help you get started in 55 seconds or less:
Once you have the basic criteria down, you need to do some serious research into plans. Choosing any investment should be an exercise that takes more than 55 seconds. However, if you are looking for a way to kickstart your efforts, you can use the above steps to help you set your criteria. This will make it easier for you to whittle down the options to three or four fairly quickly. Then, you can begin comparing the pros and cons of each 529 plan.
As you look for 529 plans, there are two more things to keep in mind:
(Photo: perfesser )
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