Do you have a child or grandchild who will likely be attending a higher education institution in the not-too-distant future? Do you want to help them with their future tuition costs, books, room and board, a computer, etc? Then a college savings plan can provide a tax-free option to help you save money for your child or grandchild.
Formally known as a 529 plan
These college savings plans allow you to save money as often as you’d like and invest the money to pursue some growth over time. As long as the money is used for a education-related expense when the child is ready for college, the growth is tax-free! This money can be used for an in-state or out-of-state school at a state university, community college, or technical school. Money from a 529 plan will pay for undergraduate or graduate-level courses.
Some employers have the option to deduct money directly from your payroll to go into a college savings plan for the child of your choice. This option makes it simple, of course.
In addition, compared to the cost of a typical college savings plan, if you were to set one up on your own, this group plan offered through your employer entitles you to reduced plan costs, which is another advantage.
Are you ready to start a savings plan?
If your family is in this situation and you’d like to begin setting money aside for future expenses, reach out to your Allen & Company team for answers to your questions and the necessary paperwork to enroll.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.