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CTSSHAH
@ctsshah
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#529Plan #SaturdaySchool So I don't have any kids and I have no student loans so this was never a priority. Now that I maxed out all my other retirement savings and tax advantage accounts, this honestly is the next frontier for me. My wife and I are hoping to try and start having kids sometime in the near future and hope to have at least 2 kids. We could easily start a 529 account in each of our names and then hopefully transfer it to our 2 kids one day. WHO should invest in 529 Plans? - My OPINION, would be those who have paid off high interest debts, maxed Employer 401(k) match, and maxed their Roth/Traditional IRA +/- full Employer 401(k) before considering 529 plans - Has tax savings advantage for paying down personal student loans up to $10,000 lifetime max at time of writing video (subject to change w/ future tax changes) - Wanting to save for K-12, apprenticeship programs, college, and/or graduate school - typically for your children but could be for yourself WHAT is a 529 Plan IRA? - A tax advantage plan that can grow tax free and be used to pay qualified educational expenses from K-12 to graduate school w/o being taxed and can pay student loan debt max $10,000 - Two basic types of 529 plans: - Savings plans - money invested can pay for tuition and room/board (more common) - Prepaid tuition plans - limited number of states / instituitions participating to lock in tuition at present rates for future use (presumably more expensive) and does not cover room and board. WHERE can I learn more about 529 Plans? - There are plenty of websites that have more information about the benefits of 529 plans - I personally use Fidelity and so I will end up starting mine through them, but consider whomever you use for your retirement savings plan as it is easier to have one home WHY should I invest in 529 Plans? - "The earnings in a 529 plan are exempt from federal and state income taxes, provided the money is used for qualified educational expenses." - Investopedia - So this is a helpful account if qualified educational expenses are definitely in the future; however, if they are not you can either transfer to a different beneficiary or withdraw w/ 10% penalty - Money is not tax deductible when contributing (some state plans are state tax deductible) but grows tax deferred and thus starting early allows for compounding HOW do I start my 529 Plans? - First check to see if starting one directly with your State's 529 Plan has any state tax savings ... if so this might be the first place to start one - If there is no such tax savings benefits, then consider through a place such as Fidelity or whom you do your retirement savings through ... as one central place is easier to manage P.S.: My parents made it a priority to save enough to pay for my sister's and my college education. It allowed for both of us to join the work force debt free and without the crushing burden that is student loans. If you can start this early for your children, I would highly recommend it. My life is infinitely better because of the planning and sacrifice my parents made for my sister and I. #WeekendVibes #TaxEfficiency #TaxTail #SaveForSchool
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