Updated for 2020: Under the latest tax plan, up to $10,000 of 529 savings plans can be used per student for public, private and religious elementary and secondary schools, as well as home school students. In other words, a 529 plan isn’t just for college tuition anymore. This is HUGE!
The best gift any parent can give a child besides unconditional love is a great education. A 529 college savings account is a solution that is designed to help families tax-efficiently save for future college costs.
You contribute after tax money with the benefit of paying zero federal and state income taxes on the profits when it’s time to use the funds to pay for college. If your child does not end up going to college, you can either name a new beneficiary (different kid) or just pay the taxes on profits.
My goal is to max out my son’s 529 plan before he turns 18 so he can focus on his studies and graduate with zero student debt. The various complaints I read today about student debt holding young adults back from saving for a house, saving for retirement, accepting a job they like that might not pay as well, or starting a family are disheartening.
Below are the most important pieces of information you need to know about making the best 529 plan decision. Feel free to provide feedback at the end on anything that I may have missed. I’ve tried to cover all the questions I had before opening up an account.