529 Savings Accounts For The Better Future Of Your Children
Higher education in the United States has never been more expensive. In order to help people get higher education without loading them with any unnecessary financial burden, the US government has introduced the 529 Savings Accounts.
As of 2007, an average cost of annual college education in state college is $18,000. This is inclusive of all the tuition, boarding and lodging expenses. If you go for a private college, the costs increase more than 100 %. One year in a four year course at private college is priced at $40,000.
At this base price, just try to guess the amount that would have to be paid for college education when a kid born in 2007 goes to college in 2024 or 2025. Not everybody is going to be able to afford that much.
This is where 529 savings accounts come in the picture. The 529 savings accounts allow you to save money for the education of your loved ones. You can deposit money as per your convenience. You are allowed to contribute as much as $12,000 every year. It would be be kept in safekeeping so that when your child goes to college, he would not have to worry about your financial problems. 529 savings accounts are delivered under the section 529 of the Internal Revenue Code of the United States. These 529 savings accounts primarily meant to encourage people to save for the higher education of their children. As an added advantage, the government has also introduced several tax advantages with these plans. All the capital gains in the form of interest on the money that is deposited in the account are not subject to any tax. Similarly any withdrawals made from the 529 savings accounts for educational purposes are not subjected to federal income tax. Please note that this tax benefit is going to expire on 31 August 2010. There is a hope that the President and Congress would bring out legislation in order to increase the duration of this tax benefit. You must keep in mind that the 529 savings accounts are more or less a type of investment account. Only difference is that you invest the money in order to keep it safe for the education of your child. As the investor you have full control over the 529 savings accounts. You also have the option to transfer the 529 savings accounts, once every year. 529 savings accounts which are approved by the Federal government but they are run by state government. This means that different 529 savings accounts are available in different states. You would have to get in touch with your financial advisor or tax attorney in order to know about the best account available in your state.
| 