529 College Savings Accounts

2006-05-14

529 college savings accounts have been attracting parents of school-age kids since their enception in 1996. The appeal of 529 college savings accounts is that they grow tax-deferred any and withdrawals used for qualified higher education expenses became tax free in 2002. Parents investing for college have taken notice and last year investment assets have ballooned to $55.4 billion.

The law that put 529 college savings accounts in place are supposed to phase out at the end of 2010. But don't worry, with the rising popularity of 529 plans, Congress is not about to let this popular tax-saver expire. Sometime in the next four years, legislators are almost certain to make it a permanent part of the tax code.

Until then, consider that 529 college savings accounts would still be a good deal for most of us. For example, contributions remain under the control of the parent until used, which means your son or daughter can't take the money and take a trip to Europe. The funds are considered part of the parent's assets when it comes to calculating financial aid. Some states even offer tax deductions or tax credits to residents who contribute to in-state 529 plans.

Just remember that not all 529 college savings accounts are created equal. Compare your investment options, fees, and tax benefits of various in-state plans. Don't rule out a investing in a 529 college savings account through your investment advisor or broker.

Related Articles:
» College Planning: Guide to saving for college
» College Planning Starts Early

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