529 College Savings Plan

Planning for your children's future educational needs can be a little difficult, but is a necessary step to ensure that your children have a chance to follow and fulfill their dreams. Beginning a 529 college savings plan for your children while they are still very young will allow you time to save enough money to pay for college without overextending your budget to get it done. A 529 savings plan is college savings account that is sponsored by a state or other financial institution.

Each state has its own 529 savings plan; they are all basically the same, with small differences as you go from state to state. They are usually grouped together with either prepaid accounts or savings accounts. Both would be accurate, as some 529 plans have elements of both types of accounts. Regardless of the state or financial institution that you go through to set up your children's 529 plan, you will be eligible for very appealing tax breaks. The investment is tax-differed and when the funds are disbursed to the college that your children choose, the transaction is tax-free.

Another advantage of 529 plans is that the donor remains in control of the account regardless of the child's age. Also, the investments that are made with the 529 plan that you choose are controlled by someone else, you never have to worry about which investment you want to make or that it will not work out to your benefit. Everyone is eligible to participate in a 529 college savings plan, no matter what their income is.

Contributing National Payday Staff Writer

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