According to the College Savings Plan Network, as of this June, assets in 529 Plans had grown 5.6% from last year reaching a record level of approximately $258 billion. While the growth is impressive what does this mean to you?
When preparing to send children to college it is important to consider the different options available. While the cost of college increases every year without fail it becomes more important to ensure your strategy delivers the best benefits to you.
529 Plans, a college savings plan that provides tax-advantaged investments to pay for qualified school expenses, provide tremendous benefits specifically because of tax advantages for the owner. Despite the tax free growth, tax free withdrawals, and state tax deductions that the plans offer, only 27 percent of families savings for college use 529 Plans; a likely cause being an overall high level of unfamiliarity with the Plans and how they work.
However, some states like Illinois and Nevada are trying to encourage 529 Plan participation by allowing employers to offer 529 Plans as an employee benefit with matching and tax deduction components-similar to a 401k.
It is important to talk with your advisor about a college planning strategy that works for you. While this vehicle provides a great plan for college savings there are many others to consider that can align with your overall financial goals. Just remember, it's never too early to start the conversation-the more time you give yourself to meet your goals the better chance at success.
Caroline Hill, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).