Finding ways to meet ever-increasing college costs is one of the major challenges facing families today. An option that has grown popular in most recent years is a 529 college savings plan. 529 plans are tax-advantaged investment accounts designed to help save funds for future higher education expenses, most commonly for children or grandchildren. Withdrawals from 529 plans are generally free from federal and state income taxes if used for qualified educational expenses such as tuition, fees, books, etc. Additionally, 529 plans have the ability to act as a powerful wealth transfer mechanism. Since contributions to 529 accounts are considered gifts, they qualify for the $14,000 gift tax exclusion in 2013. Contact us to learn more about the benefits of beginning a 529 college savings plan.
*Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult your tax advisor before investing.
Securities offered through LPL Financial Member FINRA/SIPC
Written by Megan B. Bynum, Wealth Advisor, LPL Financial