In this 2 Minute Q&A Tuesday we’re going explain 529 College Savings Plans. As a mom, I know how much it means to us to try and help our kids as much as we can with their education. If we can help them avoid the hassle of student loans, we know that would be a game-changer. But before you open a 529 plan and get overwhelmed, let’s go over what you need to know about 529 plans.
What is a 529 Plan
A 529 plan is called a college savings plan, which is really an investment account for all educational expenses. It’s the most popular and flexible way to save, invest, and help your kids with college tuition, books, computers, and so much more. Having the option to have the best resources available makes a big difference in life. This is my main priority when trying to fund my kid’s college expenses without harming my personal finances in the process.
Fed & State Tax Info
One of the biggest topics of 529 plans is taxes. Luckily the feds have made it clear that they won’t charge us any taxes if the funds are used for educational expenses. This doesn’t mean that we will get a tax break for investing in our kid’s education as of right now. So when you talk about taxes you have to consider what states are doing. The truth is, every state has its own 529 plan with different investments, fees, and tax benefits. I want to share some resources for you to get a better understanding of what your state’s 529 plan will offer tax-wise.
- How much is your state’s 529 Plan tax deduction really worth?
- State Tax Treatment of Qualified Distribution
- Does a 529 Plan affect financial aid
How You and Your Family Can Invest in a 529 plan
As my families financial journey continues, we have focused on making sure our finances are on point before funding our kids 529 plans. Now that we’ve paid off over $99K in debt, have an emergency fund, and are contributing to our retirement. We now feel that we’re positioned to rectroactivate our kids 529 plans and put enough to get the ball rolling. To our surprise our family was so motivated by our goals that instead of always buying them toy. They are now sending 529 contributions to the kids for birthdays and holidays. This is absolutely a gift that keeps on giving, as it is invested and going towards their future.
As you can tell from this 2 minute Q&A Tuesday, I can probably go on and on about investing in our kids. But the best way to invest in others is to invest in yourself. This by paying off debt quicker, budgeting, saving for bad times, and investing in your future first. Once all of these financial steps are met, you will easily be able to continue investing in your loved ones with no problem. Consistency is everything when it comes to money management and definitely for 529 plan contributions.
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- What Moms Are Saying About 529 Plans
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