If you have kids you know they can be expensive and planning for their education can be overwhelming.
The cost of college tuition has risen at an average amount of roughly 8% per year over the last few decades. For example, the tuition at the University of Pennsylvania, a private undergraduate school, was $2,770 in 1960. In today’s dollars, that’s $22,219.24 and in a half century it will cost nearly three times that at $61,800!
Luckily, 529 Plans, or Qualified Tuition Programs (QTPs), offer families a way to save for their kids (and their own) future. 529 Plans offer significant tax benefits by allowing for the prepayment of qualified higher education expenses at eligible educational institutions. This allows you to lock in the rate of your kids’ college rate at the current number. So while rates are always increasing, there are no federal taxes on your contributions’ earnings. There are often no state taxes either if you are a local resident and if your child attends an in-state college.
The benefits don’t even end there. Here are some creative ways you can use your 529 plan.
- Pay for Your Own College Expenses
If your child receives a scholarship or decides not to attend college, you can use any 529 funds toward your own educational expenses. Most plans allow you to change the beneficiary once a year, allowing you to transfer the funds to yourself. If you’ve held off on furthering your own education this is a great way to save on your own college expenses.
- You don’t have to use the 529 plan on a traditional four year school.
529 plans can be used for two-year Associate Degree programs, technical schools, trade schools, vocational schools, and even for study abroad — as long as it’s with an accredited institution.
- Benefits for Multiple Beneficiaries
Since you can change beneficiaries yearly, you could technically fund multiple beneficiaries with a single plan. If you have more than one child, and if you want to further your education, you can contribute to all of the beneficiaries’ education with a single plan.
- Plan for the Distant Future
529 beneficiaries can be anyone you choose. You can help protect your family’s future generations by including your grandchildren and even their children. This way you can ensure your legacy is secure.
- You can pay for non-qualified expenses with a poorly performing plan.
If you end up in major financial difficulties and need to pay for non-educational expenses , you may withdrawal from a plan if it is in the red without any penalties.
Start planning your little ones’ and your own future now! 529 Plans will help you secure your future and legacy. We know that taxes can be the worst. Planning ahead can help you avoid large tax costs in the future. If you need help with your 529 plan or current back tax debt our reputable tax experts at Advocate Tax Solutions are your qualified tax resource to solve your tax problems.
Call 888-737-0200 for all your tax questions or visit us online at www.advocatetaxsolutions.com
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