I know I'm not the only parent groaning over the hefty check I have to write for my daughter's college education. With such high price tags, college degrees are not easy expenses to stomach. However, with the right planning, you can at least be prepared for one of life's most costly undertakings.

A 529 plan is a state-sponsored education savings program (it's just one of many different ways to save for college). While parents and grandparents are the most frequent contributors, you can still contribute even if you're not related. Unlike other educational savings plans, 529s have tax and estate planning benefits that may make saving for a child's education a smart investment strategy for you as well.

Tax Advantages: The earnings in your 529 plan accumulate tax free. When you withdraw assets for qualified expenses at a participating college or university, your earnings are not subject to federal taxes.

Estate Planning Advantages: When it comes to your estate plan, the amount of your gift placed in a 529 plan - and any future appreciation - is taken out of your taxable estate. In addition, if you are married, you can invest up to $120,000 ($60,000 if you're single) per beneficiary in a single year in a 529 plan without incurring the federal gift tax.

You Maintain Complete Control: Although 529 plan contributions are immediately excluded from your taxable estate (unless you use the five-year accelerated gift option, in which case it will take five years to be fully excluded), you maintain ownership and control of the account. As the account owner, you - not the beneficiary - approve all investments and withdrawals and you also have the freedom to change your beneficiary to a relative of the original beneficiary without penalty.

Getting Started: Many 529 plans require an initial investment of as little as $250. You can generally make additional contributions of as little as $25 or $50 at a time.

While it may seem like quite an undertaking to finance your child's education, if you begin now when your child is still young, and save on a consistent basis, you will reduce the amount you must pay out-of-pocket and make education costs less of a financial burden in the future.


(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).