Benefits of 529 Plans

12/27/2012

Since the cost of tuition continues to grow at double the rate of inflation, starting a college savings plan has never been more important. And the earlier a person starts starts saving, the better.

529 Plans offer a tax advantaged way to save for a person's education.  529 Plans have been around for a while.  A report from the Financial Research Corporation states that about 27% of all the money Americans saved to pay for college grows in 529 plans (data from 4th Qtr 2011) and that number is expected to grow.

529 Plans offer a host of benefits that other college savings vehicles don’t offer. The advantages of a 529 Plan include:

  • Tax-free growth and tax-free withdrawals for approved higher educational expenses;
  •  Many states, including Missouri, offer a state income tax deduction for in-state residents;
  • An investor can use any state’s 529 Plan;
  • A 529 Plan can be pre-funded;
  • Keep control of the money;
  • 529 Plans makes a great legacy tool; and
  • Shelter against bankruptcy and creditors.