What is the big advantage of a 529 college savings plan?
Pros and Cons of 529 Plans
| Advantages | Disadvantages |
|---|---|
| Federal income tax benefits, and sometimes state tax benefits | Must use funds for education |
| Low maintenance | Limitations on state tax benefits |
| High contribution limits | No self-directed investments |
| Flexibility | Fees |
What happens when the owner of a 529 plan dies?
When the account owner dies, the terms of the 529 plan will control who becomes the new account owner. Alternatively, the account may be considered part of the account owner’s probate estate and may pass according to a will (or through the state’s intestacy laws if there is no will).
Are groceries a qualified 529 expense?
Food expenses and meal plans (which fall within the “board” section of room and board) are a frequent use for 529 savings because of the ease of documentation. The funds can be used to buy groceries and other meals, so long as proper documentation of the receipts is maintained.
Can you use 529 to buy a house?
Mortgage Payments Do Not Qualify as Room and Board Even if the student were to buy the home, they still can’t use 529 plan money to make the mortgage payments. A mortgage payment is a payment on a loan and not a payment of housing costs. As such, it is not a qualified higher education expense.
Which are the best 529 college savings plans?
my529 (Utah)
What is 529 college savings plan and how does it work?
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs . 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
Is a 529 plan the best way to save for college?
A good way to save for college. The 529 plan comes in two flavors, allowing parents to save for college while lowering the student debt their children will take on. Deciding which 529 plan to use depends on whether your child has picked out a particular school.
Which state offers the best 529 college savings plan?
The 9 Best State 529 College Savings Plans New York. The 529 plan offered by the Empire State is one of the best-performers, according to SavingforCollege.com. Maine. The state’s NextGen College Investing Plan has a nice mix of offerings, including Blackrock Funds and iShares ETFs, which have super-low expense ratios. Tennessee. South Carolina. Louisiana. California. West Virginia. Colorado. Ohio.