To raise awareness about the ease and importance of using 529 plans to save for college, May 29 (or 5/29) is designated National 529 College Savings Day.
- How to get involved on 529 College Savings Day:Across the country, individual states participate with planned activities including educational programs, discount admission to zoos, museums, and sporting events, and waived enrollment fees to encourage people to save through 529 plans. To find out how you can get involved on 529 College Savings Day, or for more resources and tools to make informed decisions about saving for college, visit CollegeSavings.org. Join the conversation on Twitter on May 29 by following #529Day.
- Why save with a 529 plan:Investors can use 529-plan earnings to pay for qualified higher education expenses without incurring federal tax or (in most cases) state income tax, and contributions can conveniently be made through payroll deduction or automatic transfers from a bank account. By mid-2014, 11.83 million 529 accounts opened, with total assets reaching a record $244.5 billion.
- Getting going: The first step is to determine how much you ultimately want to save for your child’s education. Do you want to save for tuition only or include room and board? All four years of college or just two? Public or private? You can use a college cost calculator to forecast what the estimated cost of college will be when your child is ready to enroll.
- Finding your fit:Nearly every state offers a 529 plan, but you don’t have to go with your state’s plan if it isn’t the best fit for you. As with all investments, investors in 529 plans should look carefully for the investment option that best matches their risk tolerance, investment objective and the age of the child. You can compare 529 plans by feature and by state.
- Start early and save often:Start saving as early as possible – you can even open an account before you have children. A family that begins setting aside $50 a month when their child is born can accrue over $21,000, in an account that earns 7% interest per year, by the time the child turns 18.
