The Stock Watcher
Sign InSubscribe

The Benefits of 529 College Savings Plans: A Comprehensive Guide

Share this article

Learn about the advantages of 529 plans for education savings.

description: an anonymous image of a family sitting around a table, looking at a laptop and discussing college savings plans.

In this article, we will explore the benefits of 529 college savings plans and how they can help families save for higher education expenses. A 529 plan is a tax-advantaged investment account specifically designed to save for future education costs. These plans are named after Section 529 of the Internal Revenue Code, which governs their tax treatment. One of the recent changes to 529 college savings plans is that money can now be converted into a Roth individual retirement account tax-free, providing even more flexibility for savers.

A new law, which became effective January 1, 2024, has made 529s a relatively more attractive way to set money aside for a child's education. The funds saved in a 529 plan can be used for a wide range of education expenses, including tuition, books, fees, and room and board. In addition, withdrawals from a 529 plan are tax-free as long as the money is used for qualified education expenses. This can result in significant savings over time.

May 29 is recognized annually as National 529 College Savings Plan Day. During the month of May, 529 plans across the country celebrate with special events, promotions, and education resources to raise awareness about the benefits of saving for education. The Nebraska State Treasurer's Office is encouraging Nebraskans to consider 'NEST 529' savings plans to help you pay for post-secondary education for yourself or a loved one.

A 529 plan is a college savings account that offers a tax-advantaged way to invest money for qualified education expenses. Contributions to a 529 plan are made with after-tax dollars, but any earnings in the account grow tax-free. Withdrawals are also tax-free when used for qualified education expenses. These plans are offered by individual states, and each plan has its own investment options and fees.

Some of the Best 529 Plans have lower fees and better investment choices. Find the Forbes Advisor list of the Best 529 Plans available to help you make an informed decision about where to save for education. In this day and age, higher education is critical for future success. Whether it's via a traditional scholastic institution or an accredited vocational program, saving for education is an investment in the future.

A 529 college savings plan offers a tax-advantaged way to save for higher education. Find out which states offer the best plans and compare their features to determine which plan is right for you. Since the advent of “529” education-savings plans in 1996, parents and other savers have complained about their relative lack of flexibility and investment options. However, recent changes have made 529 plans more attractive and versatile for savers.

529 plancollege savingseducation expensestax-advantagedinvestment accountqualified withdrawalsnational 529 college savings plan daynest 529best planshigher educationflexibilityinvestment options
Share this article