Saving for your child or grandchild’s higher education is one of the most important investments histiocytoma dog treatment you can make for his or her future. To make saving for college easier, the qualified tuition program or 529 plan was created. Named after section 529 of the internal revenue code, it is a federal-income-tax-free savings plan to be used for qualified educational expenses. Many states throughout the country also offer their own versions histiocytoma dog treatment of the 529 plan; those are administered by state agencies and other organizations.
Prepaid tuition plans – these plans allow for the pre-purchase of tuition based on today’s interest rates, with money to be disbursed when the beneficiary enters college. Prepaid tuition plans are usually managed by state organizations or histiocytoma dog treatment by colleges and universities. The funds in prepaid tuition plans can often not be histiocytoma dog treatment used for room and board at colleges and can’t prepay tuition at elementary or secondary schools.
• savings plans – most 529 plans are actually savings plans that invest in histiocytoma dog treatment mutual funds, certificates of deposit, and comparable instruments, and are therefore dependent on the investment return of these histiocytoma dog treatment assets. The tax cuts and jobs act (TCJA) of 2017 expanded the use of 529 education savings plan histiocytoma dog treatment funds from covering only qualified college expenses to also include histiocytoma dog treatment eligible private, public, or religious elementary or secondary school expenses. However, it limited the total amount payable for elementary or secondary histiocytoma dog treatment tuition to $10,000 per year.
• enjoy federal tax benefits – while you can’t take a deduction for contributions to the 529 plan histiocytoma dog treatment on your federal income tax return, investment returns within the plan grow tax-free. In addition, all distributions made from the plan for qualified higher education histiocytoma dog treatment costs are also free of federal taxation, provided they are less than or equal to the adjusted histiocytoma dog treatment qualified education expenses. The IRS publication 970, tax benefits for education, explains how to calculate the taxable portion of distributions.
• easy enrollment and maintenance – your 529 plan can provide a convenient and hassle-free way to save for college. After choosing the plan that you would like to use, complete your enrollment form and start making contributions. You can even use automatic deposit. Your plan is managed either by your state treasurer’s office, or by an investment firm that handles the plan’s financial management.
• you control the funds – as the benefactor of the 529 plan, you maintain complete control over the account. This way, you can make sure the money is used as intended histiocytoma dog treatment for educational purposes, and you decide when and how it is to be histiocytoma dog treatment spent by your beneficiary. Should circumstances change, some plans will allow you to withdraw all of the histiocytoma dog treatment money for yourself; however, you will be required to pay income tax and a histiocytoma dog treatment 10% early withdrawal penalty.
• flexibility is a plus – similar to an IRA or 401(k) plan, a 529 plan permits you to move money around to histiocytoma dog treatment different accounts within the plan. You may even be able to rollover your account into histiocytoma dog treatment a different state’s 529 plan, as long as no rollover has occurred within the past histiocytoma dog treatment 12 months. Remember, each plan has its own set of rules, so do your research before making changes that could adversely histiocytoma dog treatment affect your investment.
• UGMA/UTMA accounts – uniform gifts to minors act (UGMA) and uniform transfers to minors act (UTMA) accounts are investment accounts set up in your child’s name, which tend to offer more investment flexibility than a 529 histiocytoma dog treatment plan. UGMA accounts are restricted to financial assets, such as stocks, annuities, bonds, cash and insurance policies, while UTMA accounts can manage any tangible or intangible asset, such as artworks, real estate, or intellectual property.
• coverdell education savings account – similar to a roth IRA for educational purposes, the earnings on the account are tax-free if used for qualified education expenses, and the money can be applied to private primary- and secondary-school expenses, as well. Unfortunately, contributions are limited to $2,000 per child per year, and there are penalties for non-qualified withdrawals or if the money is not used by histiocytoma dog treatment the time your beneficiary turns 30 years old.
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