Have a child who’s headed off to college in the future? It’s never too early to start planning how you’re going to cover the rising costs of higher education. A 529 savings plan can help you save for your child’s (or other dependent’s) college tuition. The rules differ by state (you can look up your state here), but the basics are the same: you make regular contributions to an investment and then withdraw from that pool of money to pay for college-related expenses.
The good news: your withdrawals are tax-free, meaning you won’t be subject to any taxes each time you take out money to pay for a qualified expense.
The bad news: not all college-related costs are considered qualified expenses.
So before your child heads off to earn his first degree, you’ll want to do some homework yourself. Using 529 money to pay for the wrong kinds of expenses … Read More