One of the biggest dreams for many parents is to have their children attend college. Being able to afford a college education can be a daunting task for working parents who are trying to make ends meet. The Alaska 529 college savings plan is a great way to get ahead and plan for your child’s future education. The plan enables your family and relatives to put aside money for college tuition.
The program also has some amazing benefits that can help you save money on your taxes and reduce tuition costs. The 529 program gives the account owner full control over their investments and gives them a variety of options of where and how to invest their money. Here are some of the many benefits that you need to be aware of before purchasing Alaska 529 college savings plans.
Alaska Tax Benefits
The tax benefits of the 529 college fund our Norma’s. All earnings on a 529 plan are deferred from federal and state taxes. You also do not have to pay taxes on earnings that you incur over the duration of the loan. Since the earnings are tax-free the growth of the account can increase sometimes 35% faster. Gift tax exemptions are also part of the program. This means contributions can be made in the amount of up to $65,000 in a given calendar year. If a large lump sum is made in that amount another contribution cannot be made for the next five years. This tax-free tax exemption on a gift can yield amazing results for your fund.
There are eight different portfolios of stocks, bonds, and money market mutual funds that you can choose from with your 529 college savings plan. When your child is younger most of the heavy concentration of the funds will be based on stocks. As your child gets closer to attending college the focus of the stocks are changed to less aggressive forms of investments. These options are ideal for accumulating the money that is needed for college tuition. Most of the Alaska 529 options are managed by T. Rowe Price. T. Rowe Price was selected because of their low processing fees and outstanding customer service.
Making Contributions to your Alaska 529 College Savings Plan
There are many different ways to make contributions once your 529 account has been opened. You can invest regularly a certain amount of money or have automatic contributions taken out of your bank account. Automating the process makes it very easy to make contributions and stay on pace to keep your financial goals and tax. The minimum contribution to get started in the Alaska 529 college savings plan is $250.
If you live in Alaska and believe your children will be attending a state university you will surely want to enroll in a 529 college fund. These funds offer many benefits which can help you and your family in your quest for unaffordable higher education option. Investing in your child’s future education can be the smartest investment that you make in your entire life.