What Are The Benefits Of Investing In A 529 College Plan?

It is not uncommon to see people making college investment plans for their little ones right from the day they are born. In fact, some of the more thoughtful couples will plan out college investment plans for their kids even before they plan to have babies. So, what are the options for these foresighted parents?

In early days, we had Coverdell policies, and they still exist today. But what is really making people sit up and take notice is the 529 College Plan.

Let's see why. With the traditional college plans, there were several problems, as we all know. The first problem was that parents did not know how much exactly they must save. Education prices are going up year after year, and parents can have no possible idea of how the costs would look about ten to fifteen years down the line. It might very well happen that the amount you save for your kid may not even cover a fraction of the costs. This is where 529 College Plans become useful. They have a slab-wise investment pattern where you keep on investing as the years go by. That means, you can take better stock of inflation as it happens.

Another problem with college education plans is that the overriding control is generally in the hands of the beneficiaries when the time comes. Such plans were made typically for one child, and were not transferable. This is not the case with a 529 College Plan at all. A parent may open the 529 College Plan account for his or her child, but the overall control of the plan will always remain in the hands of the parents. Also, the 529 College Plans are transferable. So, if the child grows up and decides not to study college at all, or gets a scholarship that covers for the college expenses, then someone else can very easily be made the beneficiary of the 529 College Plan.

Then there are several other small benefits with the 529 College Plans that really matter much. Like, anyone can contribute to a 529 College Plan; it is not restricted to parents alone. So, you can take out this plan for your nephews and nieces, grandchildren, godchildren or anyone else you prefer. There is no income limit too. Even if your own income is paltry, you can start a 529 College Plan, unlike some other plans in the market. And the best benefit – there is no age limit when your beneficiary can cash in on the plan rewards.

There are immense tax benefits with all 529 College Plans, which are subject to state rules. So, all in all, these 529 College Plans are becoming a very effective way of managing the educational future of children, and not without reason.