How to open the best 529 account?

Ultimate Guide On Opening A 529 Account

One day, I was sitting in the office and relaxing. My colleague was sitting by my side and he asked me “Do you have 529 account for your kids education?” When I asked him why he asked about it then he said “It is a lot of money I am spending money now that my kids started going to college”. I understood that he is feeling the pressure now that he is close to 50yrs of age.

If you want to be well prepared for kids future, a 529 plan is what you need.

What is a 529 plan? We’re glad you asked. A 529 plan or account is a tax-free investment account in which you can contribute for education-related savings. These plans are offered by states and differ with respect to each state. It is tax advantaged and is designed to boost and encourage savings to cover the future cost of education for kids or grandkids. These plans are sponsored by the state government or even educational institutions but are mandated by the Internal Revenue Code’s section 529.

A 529 plan comes in two types. You can either get a prepaid tuition plan or an education savings plan. Either way, all the fifty states in America plus the District of Columbia are inclined to sponsor at least one type of plan.

529 Plan For Different States
Some states offer tax benefits for 529 plans while others offer full or partial deductions on state tax towards contributing to a 529 plan.

If you’re a taxpayer in the following states, you’re likely to get a deduction for a contribution to the 529 plan of any state.
• Arizona
• Arkansas
• Kansas
• Minnesota
• Missouri
• Montana
• Pennsylvania

However, the following seven states do not offer deductions for contributions. They include:
• California
• Hawaii
• Kentucky
• Maine
• Delaware
• New Jersey
• North Carolina

Tax deductions are a favorable criterion when one is looking for a 529 plan to enroll in; however, it should not be the only consideration. This is after all an educational savings plan that you’re handling for your ward, hence, factors like the amount of fees you have to pay for the plan as well as its investment performance should be duly considered.

529 From Vanguard
The money from a 529 account can be used to cover various educational expenses like college tuition, university funding, trade or vocational school financing, even cost of supplies, books, boarding fees, equipment, computer services, internet access, and others. Ultimately, your 529 plan should cover up to $10,000 per head, every year. Here are the best three 529 plans in the country.

Best 529 plans
There are over 3,000 investment options for 529 plans, and these are the top 3 in their respective states.

West Virginia comes in first with SMART529 WV Direct College savings plan with a performance score of 22.98.

Coming in second is the Kansas state’s Learning Quest 529 Education Savings Program at 24.98 points.

In third place is my529 from Utah with a performance score of 25.92. You can find out more about these plans by clicking on the link.

Here are some frequently asked questions about a 529 plan:
Can funds be used for elementary and high school levels?
Yes, as at last year, funds from a 529 account could only be used for college tuition and other expenses, but presently 529 plans for college savings can be used to sponsor elementary and even high school education.

What happens if funds are not used for kids, can they go to the grandkids?
Yes, your grandchildren can have access to the 529 funding provided it is for educational purposes only. You can use it to pay for his/her kindergarten, elementary, high school, and even college tuition.

Are taxes due when withdrawing from a 529 account?
There is not tax for Qualified Educational Expenses. For non qualified expenses, tax needs to be paid along with 10% federal tax penalty.

A 529 plan is the best way of insuring your child’s future. You get to invest in their education after which you can get profitable returns to streamline their success. You don’t have to contribute a lot in the beginning. Start slowly and adjust your contributions based on your finances. You can find more ways to save for your child’s future here.

How to open a 529 account?
First, you’ll need to select a college savings plan of your preference, next visit the site of the plan, open the account, choose investments, submit the application and deposit some funds for it. We have 529 plan from vanguard. If you want to open one, you can go to Vanguard.

Don’t forget to read IRS website for accurate and most current information.




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