If you have children like I do, I am sure you are already thinking ahead to the unbelievable expenses once they reach college age. With three kids, my husband and I have made sure we began setting money aside as soon as they were born.
At first, it was a very small amount for our first son. But as our careers progressed, we increased the amount invested for their education. By doing this, we are slowly saving for them bit by bit. Plus, the money is invested in programs/funds that are earning us money each month.
I recently received our 1st quarter statements for the kid's 529 accounts. Here is how much money we earned per child Jan-Mar:
- Child 1 - $443.84
- Child 2 - $515.01
- Child 3 - $515.01
The nice aspect, these earnings will not be taxable by the IRS next year. Once the kids go to college, we can then withdraw the money to pay and will not be taxed at that time, either, if used for their education.
And, don't forget we are also investing our own money into these accounts. So, combine our contributions with the earnings I mentioned above and we are one step closer to our goals.
If you can't tell by now, these 529 plans set up to help families save for college expenses while receiving a federal tax advantage. This means your money will grow faster. On top of that, most accounts are offered via states and some will then offer state tax advantages, too.
Although you will want to read the details for the 529 you select, some standard rules usually do apply.
- Invest money and it will grow tax deferred. Some states also offer a state tax incentive for their 529s
- Can invest in a 529 in any state, whether you live there or not.
- You can use your investment for any college in the U.S. and some abroad
- Investments can be transferred to other family members. If my first child gets a full paid scholarship ( I can dream, right? ) I can use the money we invested for the next child or another family member.
- If you invest in your state's 529, this does NOT mean they need to go to college in your state. The money you invest can be used for college in any state they choose.
Need some extra incentive? Remember, you can get a $25 Bonus with the current College Advantage 529 promotion going on here when you open your new account. You only need to invest $25 to get the bonus.
In addition, Libby at Thrivent is able to assist.
If you didn't get the chance to work with Libby previously, you can read here on how she saved my family and many of my readers on their life insurance. I had always thought life insurance through an employer was the most cost effective, but I was wrong.
Well, Libby can also assist with 529 accounts. If you want to open one but don't know how or where to invest your contributions, she has an account that you won't have to worry about selecting your own investments. There is a $20 a year fee for the service, but could be well worth it. Please contact Libby at firstname.lastname@example.org or 513-239-2933. Please let her know Carrie at Money Saving Methods sent you her way! She will be able to help you out!
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