College Saving Plan

If you are keenly interested in comprehending more about the college savings programs or plans which come under section 529, then we are sure you would want to read this article and know everything concerning the plans and their types.

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What is a 529 savings plan?

These are the strategic plans that are sponsored by states, provisional agencies, or educational institutions which are mostly understood as a qualified tuition plan and these are intended in order to encourage students in gathering money for future training costs and also these are authorized by Section 529 of the Internal Revenue Code. 

Types of 529 saving plans

Education Savings Plans

• It is a plan that will let an account holder start investing to save for the receiver’s future higher education expenses such as tuition, room, and board. 

• Investments in education savings plans may not make any money and could lose some or all of the money invested.

• If you are using this account to pay for primary or secondary school tuition, you may have a lesser time for your money to increase. 

• Education savings plans can also be used to pay up to $10,000 per year for tuition at any public, private school.

• All education savings plans are sponsored by state governments but only a few have residency necessities for the saver.

Prepaid Tuition Plans

• It is a plan that will let an account holder purchase credits at joining schools and colleges for tuition and compulsory fees at current prices.

• If a receiver doesn’t attend a participating college or university, the prepaid tuition plan may pay less than if the receiver attended a participating college or university. 

• These plans normally cannot be used to pay for room and board at colleges and multiversities.

• These plans are not assured by the federal government but some state authorities mortgage the money paid into the prepaid tuition plans that they sponsor although some do not. 

• It might pay only a small return on the initial investment.

What to consider before funding in a 529 college savings plan?

• Analyzation and calculation of how much to be saved. 

• Awareness regarding when to start.

• Tax benefits obtained and how it varies.

• Knowledge of tuition fees.

• Regarding the timing of withdrawals. 

• Taxes and penalties.

• Basic investment risks.

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College saving plans by the state

State	Name of the Plan
Alabama	CollegeCounts 529 plan
Alaska	University of Alaska College Savings Plan
Arkansas	GIFT College Investing plan
Arizona	University of Alaska College Savings Plan
Connecticut	Connecticut Higher Education Trust
California	ScholarShare College Savings Plan
Colorado	CollegeInvest Direct Portfolio College Savings plan
District of Columbia	DC 529 College Savings Program
Delaware	Delaware College Investment Plan
Florida	Florida 529 Savings Plan
Georgia	Path2College 529 plan
Hawaii	Hawaii’s College Savings Program
Indiana	CollegeChoice 529 Direct Savings plan
Idaho	Idaho College Savings Program
Illinois	Bright Start College Savings Program
Iowa	College Savings Iowa 529 plan
Kentucky	Kentucky Education Savings Plan Trust
Kansas	Learning Quest 529 Education Savings Program
Louisiana	START Savings Program
Massachusetts	Massachusetts U.Fund College Investing Plan
Maine	NextGen College Investing Plan
Michigan	Michigan Education Savings Program
Maryland	Maryland529
Mississippi	Mississippi Affordable College Savings Program
Minnesota	Minnesota College Savings Plan
Montana	Montana Family Education Savings Program
Missouri	MOST 529 College Savings Plan
Nevada	Nevada College Savings Plans
New Jersey	NJ BEST College Savings Plan
Nebraska	Nebraska Education Savings Trust  Direct College Savings plan
New Mexico	The Education Plan
New Hampshire	UNIQUE College Investing Plan
North Carolina	College Foundation of North Carolina
New York	New York’s 529 College Savings Program
North Dakota	College SAVE
Oklahoma	Oklahoma College Savings plan
Oregon	Oregon College Savings plan
Ohio	Ohio CollegeAdvantage 529 Savings plan
Pennsylvania	PA 529
Rhode Island	College Bound Fund
South Dakota	College Access 529
South Carolina	Future Scholar 529 College Savings plan
Texas	Texas College Savings Plan
Tennessee	TN Stars College Savings 529 Program
Utah	Utah Educational Savings Plan (UESP)
Virginia	Virginia529 inVEST
Vermont	Vermont Higher Education Investment plan
Wisconsin	Edvest College Savings plan
Washington	DreamAhead College Investment Plan
West Virginia	SMART529 WV Direct College Savings plan
Wyoming	There is no state plan

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Advantages of these plans

Prepaid Plans

• It is a risk-free way to pay for college. Invested money cannot be lost.

• Possible tax breaks: These are free from federal income tax and are often excluded from state and local taxes, as long as they are used to pay restricted education expenses.

• Many plans are guaranteed by state governments.

Savings Plans

• Investments grow tax-free for as long as the money tarries in the program, and when money is taken out for education purposes, the saver will not have to pay federal taxes on any part of it.

• For most plans, the student can attend any accredited college in the United States and many institutions abroad. Accounts can be opened for any number of people regardless of age.

Disadvantages of these plans

Prepaid Plans

• Most of these plans will have a limited enrollment period.

• Most state-sponsored plans require either the owner or the receiver of the plan to be a resident of the state.

Savings Plans

• Since the investment is directly related to the stock market, these plans have the potential to lose money.

• If money is taken out of this plan for purposes other than education, the saver will be charged a 10% penalty on the earnings.