Saving For Your Kids with Sarah Holden | Ep. 107

Key Takeaways

• 1

  529 plans offer powerful tax advantages for education savings

  Earnings grow tax-free inside the account

  Withdrawals for qualified education expenses are completely tax-free

  Many states offer additional tax deductions or matching contributions

• 2

  Two main types of 529 plans exist with different structures

  Prepaid plans let you buy future tuition credits at today's prices (usually in-state only)

  Savings plans are more flexible, allowing investment choices and broader use of funds

  94% of the $480 billion in 529 plans at end of 2021 were savings plans

• 3

  529 plans have significant flexibility if plans change

  You can change beneficiaries to another family member or even yourself

  Up to $10,000 can be used to pay student loans

  Funds can cover apprenticeships and K-12 expenses in some cases

• 4

  Start with your state's plan but compare options

  Use the College Savings Plans Network comparison tool to evaluate all state plans

  Check investment options, fees, and whether out-of-state residents are accepted

  Age-based funds automatically adjust from stocks to bonds as college approaches