![]() ![]() ![]() Keep in mind that your gifts are excluded from your estate, so investing in a 529 Plan can be a smart strategy to help reduce your estate tax.įunds may be withdrawn without penalty if the beneficiary receives a scholarship (withdrawals can be made up to the scholarship amount), or in the event of the death or disability of the beneficiary. Under the gift tax exclusion, you can gift up to $15,0000 ($30,000 for married couples) annually 2 per beneficiary, or gift up to $75,000 ($150,000 for married couples) over a five-year period, without triggering the gift tax. In other words, since you are paying in advance, you may be avoiding potential tuition inflation down the road. ![]() Prepaid tuition plans-allow you to lock in tuition rates at eligible colleges or universities with a lump-sum investment or monthly payments.Students can use the funds for qualified expenses at accredited institutions in the U.S. College savings plans-allow you to invest your money in an account to pay for the student's education expenses.529 plans may also affect a student's eligibility for financial aid.Īlthough many details of 529 plans vary by state, they generally come in two forms: 1 If the money from 529 plans is used for other purposes, the earnings portion of a withdrawal is subject to ordinary federal income tax, an additional 10% federal tax, and any applicable state income taxes. And you may be able to withdraw the money without having to pay federal and state income taxes-depending on the plan and where you live-as long as it's used to pay for qualified, education expenses. Tax benefits may be subject to certain restrictions. The funds may generally be used for any qualified college or education expense, including tuition, room, board, fees, books, supplies, and equipment. Unlike some other savings vehicles, a 529 plan may allow you to make sizeable contributions. A 529 plan is a tax-advantaged way to save for college and pay for education expenses. If you find yourself intimidated by the ever-rising price of higher education, then a 529 plan might be a key component in saving for a college education. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |