The article discusses the financial planning necessary for parents considering college for their children, especially surrounding the use of 529 plans. It clarifies misconceptions about 529 plans and highlights the potential for tax-free growth on investments when used for qualified education expenses. While directly deducting contributions from taxable income isn't possible, various states provide tax benefits, including deductions or credits for contributions. Additionally, new rules allow rollover of unused 529 funds into Roth IRAs, offering further flexibility for families.
Every parent hopes their children will someday attend college and change the world.
The hope is that you live in a state where you have at least some opportunity to use a 529 plan for tax benefits.
The account's earnings are free of federal taxes if you use these funds for any qualified education expense.
Over 30 states and Washington, D.C. offer tax deductions or credits for 529 plan contributions.
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