The school share 529 college savings plan is California’s best option for paying for your children’s college tuition. A 529 plan is a savings plan sponsored by the state of California. It can be used for tuition, books, and college living expenses at most accredited four-year college universities. Most vocational technical schools are also eligible for the 529 plan.
529 Investment Options
Fidelity, which manages the 529 plans, offers a large choice of investment options that you can take advantage of. You should base your investing strategy on the student’s current age. The younger the child is the more reason you should obtain a balanced portfolio. Custom strategies also are offered to customize investments for your personal situation. You can speak to a customer representative to get a better idea of what might be the best plan or option for you.
California 529 Tax Advantages
If you live in California and invest in the 529 college savings plan you have some tax advantages that you should be aware of. Any earnings growth through the savings plan is tax-deferred. Distributions for higher education expenses are federal income tax free. Taking advantage of these tax benefits can be a great way for you to help your child and lower your taxes.
Who is Eligible?
Any resident who is 18 years of age or older and has a so security number can be part of the California 529 plan. These higher education savings plans are meant to help United States citizens lock in college tuition costs at their current prices. There are no income restrictions for applicants. Another great advantage is that the beneficiary of the account can be changed as long as the new beneficiary meets the eligibility requirements. Adults can use the 529 plan to also attend college.
The 529 Plan as a Gift
Parents as well as grandparents purchase gifts for their children on many different occasions. These occasions include birthdays as well as special moments in their life. Offering the option of the 529 savings plan as a gift can be a great way for grandparents to invest in their grandchildren’s future. Grandparents can open up their own account which they will control through the life of the savings plan. They will also control the distribution of the assets that are obtained. The account owner can take advantage of the possible gift and estate tax benefits that are accumulated over the timeframe of the plan.
Help with Managing your Account
The 529 California college savings plan is run by Fidelity investments. Because it is a Fidelity account you have the benefits of speaking to employees to help you better understand where you should invest your money. Customer service representatives at Fidelity are very helpful and knowledgeable about Investing.
If your child or student is lucky enough to obtain a scholarship to a college your 529 plan is not affected. If the beneficiary receives a scholarship the amount can be withdrawn from the plan. The federal tax penalty would not apply in this situation. Earnings incurred during the period of time would be subject to federal income tax.
The California 529 plan is a great way for parents to invest in their children’s future. Education has never been more important than it is in today’s economy. Having a competitive advantage over your peers can be the difference between a high paying job or being unemployed.