A 529 plan is a great option for families looking to save money for their child’s education. With college tuition rising so fast – up 168 percent over the last 20 years, according to U.S. News – it’s more important than ever to plan your finances carefully.
529 plans are state-sponsored and allow you to use after-tax contributions to grow earnings on a tax-deferred basis. You’re permitted to join the plan offered by any state, but yours might have unique benefits or additional state tax breaks for residents.
You can withdraw the funds for qualified educational expenses, including tuition, fees, and textbooks without having to pay taxes. With a 529 education savings plan, families can open an account and then invest their money in high-growth assets such as stocks.
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