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College Savings Plans

College savings accounts are an investment plan that enables you to save money for a child or any beneficiary to pay for their college education expenses. One of the advantages of a college 529 plan is you can withdraw the funds tax-free.

What is a 529 Plan?
Established in 1986 by the Michigan Education Trust, the first 529 savings account was first a prepaid tuition plan. The earning in the savings plans can accumulate on a tax-deferred basis, and the distributions are not taxed so long as they are used in higher education.

Why Invest in a 529 Plan for your Child
One of the benefits of the 529 plan is that you can use it to pay for any cost at any qualified college institution. Whether you live in New York or Connecticut, you can send your child to study in California. With the 529 college savings accounts, you can use your plan at more than 6,000 US colleges and universities. The plan also includes about 400 foreign colleges and universities in the country. Keep in mind that the cost of education is rising. It can sometimes cost you a fortune to send a child to school or college. With a college savings plan, you won't have to worry about your child's education. There are several advantages to investing in a 529 savings plan for your child.

Low Maintenance
It's easy to open a 529 account. You can either do it online or through a financial advisor like Casement Group. Also, we can just set up an automatic plan that's linked to your bank account. It's hassle-free as someone will be handling your account.

Tax Benefits
Distribution will be tax-free so long as you use the funds to pay for your college tuition, room and board, books and supplies. You should note that 529 plans are the only college savings plan with state tax benefits.

High Contribution Limits
Compared to other savings plans, the 529 savings plans do not have yearly contribution limits. Although the contribution varies by state, it can go up to over $500,000. They are also considered as completed gifts for tax purposes.

It's open to everyone. Whether you have high or low income, you can invest in any 529 plan. Your child can attend whatever college he chooses, so long as it's one of the qualified colleges.

Types of 529 Plans
Two savings plans are available under the 529 plans: college savings plans or prepared tuition.

  1. College Savings Plans - These work like Roth 401(k) as it invests your after-tax contributions in mutual funds or other investments. You can choose different investment options for your college savings plans. We recommend that you speak with one of our financial advisors so we can provide you with the best solutions.
  2. Prepaid Tuition Plans - This lets you pre-pay part or all of in-state public college education costs. You can also convert for use at an out-of-state college or private college.

How to Use the 529 Plan
When your child is enrolled at least half-time, it means that he can use the 529 plan to pay for his room and board. In most colleges and universities, he will have to enroll in at least 6 credits per term. For those who live inside the campus, the expenses can't exceed what was charged by the school.

Contact the Casement Group
Are you ready to save for your child's education? Our financial advisors can help! We are dedicated to helping families grow their investments and save for their children's college education. Get in touch with us today so we can start planning. Let us know what your goals and objectives are so that we can present the best solutions.