How To Start A College Fund
Parents of children often begin to worry about how they will be able to afford the college education of their child and wonder whether obtaining student loans is the only option available to them. Student loans are easily available but they can put a debt burden on the student. Parents may find themselves in a better position to decide to conduct some research and try to understand how to start a college fund.
One option that parents should be looking at is the 529 college savings plan which will be appropriate for their requirements. Student loans despite being available are not the perfect option for parents who may not want their children to be burdened by debts. Planning in advance and preparing for the college education of their children will give the parents an opportunity to set finances aside to start a college fund. The 529 college savings plan is a perfect platform which the parents should be utilized because they can save a significant sum of money by making an early start and saving as much or as little as they can. Let us understand how a 529 college savings plan can help parents to serve the funds required for the college education of their child.
Planning in advance and preparing for the college education of their children will give the parents an opportunity to set finances aside to start a college fund. The 529 college savings plan is a perfect platform which the parents should be utilized because they can save a significant sum of money by making an early start and saving as much or as little as they can. Let us understand how a 529 college savings plan can help parents to serve the funds required for the college education of their child.
Investing in a 529 college savings plan
The 529 college savings plan is named after a section of the Internal Revenue Code under which it was created and the plan allows people to save money for college education. The money saved will accumulate interest and can be withdrawn tax-free when it is being used for expenses related to education. Some 529 plans do not have any minimum dollar requirements and allow families to save as little or as much as they possibly can.
Parents who are accustomed to paying for everything in cash and save the small change and deposit the money in their checking on to be transferred to the 529 plan. As no minimum dollar requirements have been stipulated parents can decide to save just five dollars every week and rest assured they will save a significant amount over the course of the year. They will also have an opportunity to earn some interest which will again add up to the principal.
Choosing a 529 plan that is uncomplicated
Parents are advised not to choose a complicated 529 plan which offers great returns but to look for a 529 plan that has investment options suitable for individual requirements. Investment options that are age-based are excellent for account owners who may not want to manage the funds in their account.
Saving systematically and within the budget
Experts have provided an opinion that setting an automatic monthly deposit into the 529 plan is a convenient method for parents to remember they have set money aside for the college fund. However, it must also be noted that people may come across financial hardships and may not be able to meet the commitments they make every month. The experts have stated that parents should consider an amount they can afford according to their sources of income. The option of setting aside extra money whenever possible is anyway available for parents who have decided on a 529 college savings plan.
State benefits also available for 529 plans
Parents are advised to conduct some research and understand whether the 529 plan offered by the state where they are residing is offering any incentives because some states offer tax benefits to any plan in the country. According to information provided by experts, state benefits can be close to nearly $1000 every year.
When parents decide to invest in 529 college savings plan they are only required to pay income taxes on the money they invest in the plan. The earnings on this investment are exempt from income tax even when the money is withdrawn to pay for college education.
Parents who decide to start a college fund and save money over an extended period of time will find they are getting tax breaks to the tune of thousands of dollars. This is one of the most lucrative tax incentives for people and one which can save them a huge amount of money. The 529 college savings fund is an investment plan for people who do not know how to start a college fund.
More in Investments & Savings
Taylor Swift Earns Some Good Karma by Donating $113,000 to LGBTQ Rights Organization
Taylor Swift took that blank space on a check and filled in $113,000 on it, donating rather generously to TEP or the...April 12, 2019
Allison Mack’s Shocking Racketeering Case: Tears, Apologies and a Cult Revealed
Allison Mack is someone who we saw regularly on the Superman-inspired show Smallville. That’s why it was quite a shocker to...April 12, 2019
Jennifer Lopez had Major Doubts before She said ‘Yes’ To Alex Rodriguez
Even since actress-singer Jennifer Lopez’s relationship with Alex Rodriguez is starting to become serious, people couldn’t help but speculate that an...April 11, 2019
Why An Engagement is in the Air For Chris Martin and Dakota Johnson
They are one of the most unlikely pair and yet they got together and their relationship seems to be getting more...April 11, 2019
Lisa Bonet Threatens to Leave Jason Momoa if He Ever Does THIS
It must be great being Jason Momoa – towering over everyone, wearing oddball head gear and Boho-chic clothing, and been cast...April 10, 2019
Jeff and MacKenzie Bezos are Set to have the Most Expensive Divorce Settlement In History
When Jeff Bezos, the founder of Amazon and his wife, MacKenzie, announced they have separated in January of 2018, ending their...April 9, 2019
Blanchard Family Thinking of Suing Hulu Because of ‘The Act’
The story of Gypsy Rose and Dee Dee Blanchard is nothing like any story you’ve ever heard before. We can say...April 9, 2019
Angelina’s Eldest is Off to College!
Angelina Jolie may be one of the most famous people in the world, but recently she experienced what many ordinary humans...April 8, 2019
The Curious Case of Jamie Foxx and Katie Holmes
Who isn’t curious about the relationship of actors Jamie Foxx and Katie Holmes? Because we definitely are. The question has always...April 8, 2019