With another new year just around the corner, you may be thinking about financial planning as a part of your New Year’s resolutions. For those of you with a newborns or young children in the family, you may be thinking about opening a college savings plan.
A 529 account can be a great way for parents and grandparents to start a college savings plan. Here’s some commonly asked questions about opening a 529 account.
Who can use a 529 savings plan?
529 accounts can be used to start college saving for any student or future student in your family, including yourself.
When should I start my college savings plan?
Obviously, the best thing you can do is to start saving right away. However, it is never too late to start a 529 account for you or a loved one planning on attending college or a higher education institution.
Is a 529 account the only college saving plan available?
No, you don’t have to open a 529 account to start saving for college. There are several other college saving options available. Each has it’s advantages and disadvantages and it may be wise to consult with a financial or tax adviser when finding a saving plan that fits your needs.
College savings plan or prepaid tuition plan?
Along with the traditional, 529 college savings plan, some state and private colleges offer prepaid tuition plan options. With prepaid tuition plans, you can purchase credits towards college and university tuitions and fees at current prices. Keep in mind that prepaid tuition plans are typically subject to requirements such as mandatory residency requirements and you can only apply your prepaid credits to approved colleges and/or universities.
While a traditional college savings plan can be more flexible in terms of requirements and restrictions, it’s important to remember that, as with any investment, it is subject to loss-risks.
If you’d like more details on 529 accounts and other college savings plans, check out the College Savings Plan Network for information and educational resources.