State Tuition Plans
Most states sponsor a college savings plan, also known as 529 Plans, after the IRS code authorizing these accounts. States determine the maximum
amount families may contribute annually per child.
Advantages:
- Savings are not subject to state and local taxes.
- Taxes on the interest will be deferred until the child goes
to school.
- Interest is taxed based on the child's lower tax bracket.
Disadvantages:
- Not eligible for federal tax deductions.
- Some states may assess penalties if the child attends an
out-of-state school.
- Some states pay low interest rates.
Now students and their families can take advantage of new federal
and state tax laws to plan and save money for higher education.
Clear up any confusion regarding finances in terms of saving for
college with these helpful topics.
