What is now the best way to save for college expenses?
In my professional opinion, for most people, It’s the 529 College Savings Plans. They are now worth a very serious look!
Section 529 of the Internal Revenue Code (the actual name) was put into place to encourage families to save and plan ahead for escalating higher educations costs. There are currently nearly 9 million 529 Plan accounts now with roughly $90 Billion dollars invested.
Here are a few reasons that most people don’t know that makes 529 Plans more attractive than ever.
The Tax Increase and Protection Act of 2005 (which became law in 2006) extended the “kiddie tax” rules from age 14 to 17, which made traditional savings accounts, also known as custodial accounts, much less appealing. That and other new laws made 529 college savings plans MUCH more appealing.
With these plans, you could open an account and deposit money (NOT deductible on your federal tax return) and the money would grow tax-free. These deposits could be invested in money market, bond and stock mutual funds.
The Pension Protection Act of 2006 guarantees the tax-free withdrawals from...
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