But what does it mean and why should you care?
A 529 Plan is an investment vehicle for college savings. It’s cleverly named for section 529 of the Internal Revenue Code and offers tax savings on money you set aside to pay for college for a beneficiary, such as a child or grandchild. The money you put into the account grows based on the type of investment (typically mutual funds). The earning from this investment are tax free, so long as they’re used for qualified educational expenses.
You should care because the average cost of a college education (overall cost to attend public, in-state university, with no financial aid) was just over $22,000 per year in 2012, according to The College Board’s Trends in College Pricing 2012. Costs are expected to continue to rise faster than inflation due to a variety of factors. You can research the bejeezus out of it but the bottom line is – it’s expensive! And you can add roughly 4-5% a year until Junior is ready to enroll.
So stay healthy because you may need to sell a kidney.
Or, you can start saving now. A 529 Plan is one of many ways to save for college, and we have 529 College Savings Day to increase awareness about this tax advantaged way to save and grow money for college.
The College Savings Plans of Maryland is putting on a webinar on 5/29 at 12:00 pm to help you learn all about 529 plans. Register for the Maryland 529 Plan webinar here.
Check out more 529 resources here.
Flickr image courtesy of Tax Credits
Tags: Maryland 529 Plan