By Velida Alemic
The 529 plan is an education savings plan that is designed to help families set aside money for future college costs. The plan was named after Section 529 of the Internal Revenue Code which created this type of savings plan. One benefit of the 529 plan is that it is tax-free. This plan is managed by professional investment companies such as Fidelity, Alliance and Prudential.
Marketing for the 529 plan has picked up lately and every plan manager advertises like their plan is the only plan available in the world. The truth is there are over 80 plans and 1,000 investment options to choose from. It is very important to research your options before making your final decision.
Even with the high marketing rate for these plans, only about 25% of parents are aware of the 529 plan. Starting a 529 plan is crucial especially with the rising prices of tuition. You can start a 529 plan with as little as a $25 deposit and then build on from there. Saving money gradually and investing it in the right places will help you immensely when it comes time for college. Families will not feel the pain of having to pay for college all at once, saving little by little doesn’t hurt as bad.