Now that little Johnny, or Susie is off to school this fall, you may be wondering if you will be able to send them to college when that time comes. Saving for your child's college education requires smart preparation and a financial planner to help you make the most astute choices. The professionals at Weaver Insurance & Financial Advisors have the expertise to help you maximize your investments. If you live in the neighborhood of Waynesboro, VA, these experts will provide you with personalized attention and help you make secure plans for your child's education.
One savings vehicle frequently recommended by financial planners for college funding is a 529 plan. This is an education savings plan run by a state or educational institution. Created in 1996, it gets its name from Section 529 of the Internal Revenue Code.
These plans may be tapped to fund colleges located outside of the state in which the plan was created. The college needs to be eligible under 529 rules, and your financial planner will provide you with a list of colleges meeting these requirements.
A 529 plan offers useful tax benefits. Contributions are allowed to grow without being taxed by the federal government, and the money will not be taxed when it is withdrawn to pay for college. On the other hand, other investment options such as mutual funds are taxed annually and are subject to capital gains tax upon withdrawal.
This college savings plan is relatively low-maintenance. Your financial planner will help you enroll, and you can set up automatic investments deducting money from your bank account each month. You won't have to worry about managing the money, as this task is handled by an outside investment company.
You have the freedom to alter your 529 plan’s investment options up to two times within each calendar year. Unlike IRAs, there are no income limits or age limits governing these plans, and you can contribute as much as you want each year.