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- May 29 is recognized as 529 Day, a prime opportunity to enhance awareness about college savings plans.
- These plans are not just beneficial for traditional four-year college attendees but also for vocational and trade school students.
- “These are incredibly tax-advantaged investment vehicles,” remarked Andrew Kadjeski from Vanguard.
Explore the multifaceted benefits and new features of 529 college savings plans that make them an essential part of educational and financial planning.
What Makes 529 Plans So Attractive
529 plans are renowned for their tax advantages and flexibility, which are now enhanced by recent legislative changes, making them even more appealing for long-term educational savings.
Many Uses Of 529 Plans
From funding private kindergarten to paying off student loans, the uses of 529 plans are extensive and cater to a wide range of educational needs.
FAFSA Change Improves Financial Aid Calculations
The recent FAFSA modifications favor grandparents setting up 529s, excluding these savings from being counted as student income, thereby not jeopardizing financial aid eligibility.
529s Have Estate Planning Benefits
Contributions to 529 plans are treated as gifts, potentially reducing the taxable estate size while providing substantial educational funds to beneficiaries.
529 Plans Can Fund Retirement, Too
New rules allow unused 529 funds to be rolled over into a Roth IRA, providing additional flexibility and extending the tax advantages originally meant for education costs.
Max Out 529 Plan Perks
Understanding the full scope of benefits 529 plans offer can significantly alleviate concerns about overfunding, especially with options to roll over unused funds into retirement accounts.
Moving Money Around
The flexibility of 529 plans is further highlighted by the ability to transfer funds between beneficiaries, ensuring that the educational goals of one do not hinder the potential benefits to another.
Conclusion
529 plans offer more than just a way to save for college; they are a versatile tool for financial planning, providing benefits from educational funding to retirement savings and estate planning.
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