School is almost out for the year and that means you are one year closer to the children in your life leaving for college. If you have grandchildren or children at home you’d like to help with their college education, it pays to start saving as early as possible.
The government has given us a tool that makes saving for college a lot easier. The 529 college savings plan is a great tax-advantaged program to help you get a head start on your children’s college costs.
There are two excellent options available to help you save for college-the 529 college savings plan and prepaid tuition plans. The money you contribute to a 529 plan grows tax free within your account and withdrawals from the plan for qualified educational expenses are exempt from federal taxes. By investing in a 529 plan outside the state in which you pay taxes, you may lose tax benefits offered by the state’s plan. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary.
You might also consider a prepaid tuition plan. These are offered primarily by state colleges and universities to help you lock in today’s prices for tomorrow’s tuition costs. They allow you to pay tuition in advance to cover your child’s fees and expenses.
With prepaid tuition plans, your concern might be that your child may decide on a college in a different state. Fortunately, these plans allow you to transfer the value to out-of-state public and private colleges.
Don’t wait too long to start your college savings plan. Talk to your financial advisor about setting up a savings plan for you to ensure that your children or grandchildren have the resources they need to get a college education.
Covering your back
No matter how well we plan, unexpected adversity can take us off track. That’s why it’s vital to include risk management as part of your financial planning process.
It’s important to review your insurance coverage from time to time to make sure that you and your family are adequately covered to get you through difficult times. Do you have sufficient life, health and disability insurance? Does your homeowner’s insurance policy provide enough coverage to protect you from law suits that may result from mishaps at your home?
Find out if you have the coverage you need to make it through your difficult times. For your own peace of mind and the financial security of your family, take some time now to sit down with your financial advisor and review your insurance coverage.
By investing in a 529 plan outside of the state in which you pay taxes, you may lose tax benefits offered by the state’s plan. Withdrawals used for qualifed expenses are federally tax-free. Tax treatment at the state level may vary.
Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.