Planning for college early on can make a big difference in terms of the amount that you have to help pay for the costs of college. Many people do not plan ahead and then are surprised by the high amount of student loans they have to take out in order to fund their education. Over time, they are going to find that the interest on these student loans is high and it is almost impossible to pay them off in a reasonable amount of time. But when you start saving early on, you could offset some of the costs of your college tuition and save a whole lot of money in student loans and student loan interest in the long run.
A 529 college savings plan is one of the best options that you can make when it comes to getting your child ready for college. It helps you to earn money, similar to your retirement plan, and you do not have to claim the money on your tax return at the end of the year. The money can grow and grow over the years without being taxed and after some time, you will find there is quite a bit of money to help offset some of the costs of attending college. If you are interested in signing up for one of these savings plans and want to learn more about how this whole process works, make sure to talk to your tax professional to get this all taken care of.
What is the 529 Savings Plan?
The 529 college savings plan is just what it sounds like. It is a plan that helps parents to save money back to help their children get ready for college. With the price of college going up each year, it is no wonder that the student loan debt is also going up. Finding time to work three full time jobs to pay off college or putting the degree off for longer is not always a possibility and being stuck with all that student loan at the end of your education isn’t a much better process either.
The 529 plan works similar to a retirement plan in that you can make contributions to a plan and over time it will grow and earn interest as well. The contributions are also tax deductible, making it the perfect one for you to save money both for college and for your taxes at the end of the year. Your student can use it towards a school of their choice and not have to worry about all the debt when they are done.
For those who are interested in getting one of these college savings plans started, make sure to talk to a tax professional right away. This will give you more time to save for college and could make a bigger dent in paying for college than you could imagine.
How Much to Save
Figuring out how much to save for your child’s education is the next question that you may have. In most cases, the more that you are able to put into savings with this plan, the more that will be available when they are ready to go to school. Add in the compound interest, and you are going to have a nice little sum that can help them to get through school without having a ton of student loan debt at the end of the year.
One good way to figure out how much you are able to put behind for this savings plan is to look over your budget and also to see how each of the different amounts are going to factor into your taxes. Since the contributions to this plan are able to be deducted on your tax return, it is important to figure out how much this is going to influence you at the end of the year. Make sure to talk to a tax professional when setting this plan up so you can learn how much is the best amount for you and how this will influence your taxes.
Getting It Set Up
Getting a 529 college savings plan set up is a smart way to help your children invest in their future. The cost of college is just going to go up and having a good amount of savings ready when they are ready to go is going to save them a ton of money, in interest and fees, and will make their studies that much easier.
To get one of these savings plans set up, you just need to find a qualified tax professional who will be able to get the account going. These accounts do not have to be difficult and there are a lot of great options that you can choose to help make this easier than ever. The earlier you get started on the college savings plan, the more money you will be able to save and earn with the compound interest. Talk to your tax professional to get this all set up and determine how much you should save to help your child the most.
Setting up a 529 college savings plan doesn’t have to be a hassle. With the right help from your tax professional, you can get this savings plan set up in no time and have your college education taken care of. Contact our offices today to get started.
Larry Gurewitz