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A good education can bring a lifetime of benefits – but no one wants to spend a lifetime paying off the bills. If you’re ready to start saving for a child’s education, one option to consider is a 529 plan.
A 529 plan is a tax-smart way to help your family pay tuition and other qualified education expenses. And you can use May 29 – or 5/29 Day – as your reminder to start or contribute to a 529 plan.
A 529 plan offers:
So on May 29, make a note to contact your financial advisor about starting or contributing to a 529 plan.
Withdrawals used for expenses other than qualified education expenditures may be subject to federal and state taxes, plus a 10% penalty on the earnings. Contributions may be eligible for a state tax deduction or credit in certain states for residents who participate in their own state’s plan. 529 education savings plans may reduce a beneficiary’s ability to qualify for financial aid. Please consult with your tax advisor regarding the tax implications of 529 education savings plans. Some states’ 529 plans may also recognize certain elementary and secondary tuition expenses as a qualified expense. Before using funds for elementary and/or secondary tuition expenses, please consult with the plan sponsor and/or a qualified tax advisor to avoid incurring potential state tax consequences and/or penalties.