A 529 plan could mean less financial aid. The largest drawback to a 529 plan is that colleges consider it when deciding on financial aid. This means your child could receive less financial aid than you might otherwise need.
Can a child be the owner of a 529 plan?
Anyone can open and fund a 529 savings plan—the student, parents, grandparents, or other friends and relatives.
What is the best college fund for a child?
A 529 plan is one of the best, tax-advantaged ways to save for higher education costs. Traditional and Roth IRAs can be used to pay for college expenses, but parents should be sure their retirement needs are covered. Coverdell ESAs allow you to set aside $2,000 per beneficiary per year.
Why is it important to have a 529 plan?
529 plans allow families to put away money that will grow tax-free as long as it is eventually spent on qualified higher education expenses. The idea is that employer-sponsored 529 plans will get more families to save for college just as 401(k) plans helped grow retirement savings.
Are there any states that offer 529 plans?
Higher education is an essential part of a community’s future prosperity and economic mobility, which is why some states are encouraging employers to offer 529 plans. Nevada and Illinois currently offer employers a tax credit for matching employee 529 plan contributions.
Can a 529 account be used for school tuition?
If you are using a 529 account to pay for elementary or secondary school tuition, you may have a shorter time horizon for your money to grow. You also may not feel comfortable taking on riskier or more volatile investments if you plan on withdrawing the money soon.
Can a 529 plan be opened by an employer?
Nevada and Illinois currently offer employers a tax credit for matching employee 529 plan contributions. Just about anyone can open a 529 plan, even if it’s not offered through your employer. Most states offer a direct-sold plan, which you can sign up for online, or an advisor-sold plan, which has to be opened through a financial advisor.
