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Best Education Savings Plan for Children: 529 Plans Compared
Let’s just be honest- college expenses and private schools are shockingly expensive in the United States. Unfortunately, education costs continue to rise at about 2% per year.
If you plan to save for your children’s education costs, there are multiple accounts to choose from. Let’s remove the guesswork and break down the best education savings plans for children.
529 College Savings Plans
Federal Income Tax Benefits
Contributions are made with post-tax dollars. The savings will grow tax-free, and the money can be withdrawn tax-free if used to pay for qualified educational expenses.
Although 529 contributions are not deductible from federal income taxes, most states offer tax advantages, in the form of tax deductions or credits. Benefits vary and should be reviewed on a state-by-state basis here.
State Income Tax Benefits
– Tuition and associated fees
– Room and board
– Books, computer + technology, school supplies
– Internet access
– Expenses related to special needs students
Qualified educational expenses
– Up to $10,000 per year for private tuition [K – Grade 12].
– Up to $10,000 (once per lifetime) to repay student loans (per borrower, not per 529 plan)
– Expenses related to apprenticeship
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