529 College Savings Plans Get Better Than Ever

529 College Savings Plans Get Better Than Ever

What is​ now the best way to​ save for college expenses?

In my professional opinion, for most people, It's the 529 College Savings Plans. They are now worth a​ very serious look!

Section 529 of​ the Internal Revenue Code (the actual name) was put into place to​ encourage families to​ save and plan ahead for escalating higher educations costs. There are currently nearly 9 million 529 Plan accounts now with roughly $90 Billion dollars invested.

Here are a​ few reasons that most people don't know that makes 529 Plans more attractive than ever.

The Tax Increase and Protection Act of​ 2018 (which became law in​ 2018) extended the "kiddie tax" rules from age 14 to​ 17, which made traditional savings accounts, also known as​ custodial accounts, much less appealing. That and other new laws made 529 college savings plans MUCH more appealing.

With these plans, you could open an​ account and deposit money (NOT deductible on your federal tax return) and the money would grow tax-free. These deposits could be invested in​ money market, bond and stock mutual funds.

The Pension Protection Act of​ 2018 guarantees the tax-free withdrawals from the plans for higher education expenses will not fade away as​ they would prior to​ the PPA of​ 2018.

That is​ a​ pretty good deal isn't it? But there are also estate planning and gift planning benefits that aren't available on any other college funding plan.

The tax code allows parents or​ grandparents to​ deposit up to​ $60,000 in​ a​ 529 plan for each child (married couple can deposit twice that amount), free of​ gift tax, due to​ the laws allowing up to​ 5 years of​ gifting (up to​ $12,000 per person per year) to​ be done in​ one fell swoop with these college saving plans. it​ is​ a​ great way of​ getting assets out of​ the wealthy estate for the benefit of​ heirs.

And it​ gets even better! And you know what else is​ great

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