At Black Harbor Wealth Management, we help families across South Carolina grow their wealth so they can be better prepared to meet financial goals in the future. However, many individuals neglect to save for their children’s college education. If you’re interested in setting up a college fund for your child as part of your wealth management strategy, we can help. Today we’ll take a look at one of the more popular ways to save for your child’s education: the 529 Savings Plan.
What is the 529 Savings Plan?
A 529 savings plan is a college savings plan sponsored by the state and operates in a similar way to your employer-sponsored 401(k). Like your 401(k), your contributions will be invested in certain funds to help the amount you save grow over time. When you set up your fund, you’ll have a choice as to where you would like the funds to be invested, and your advisor at Black Harbor Wealth Management can help you find the best option.
Benefits of the 529 Savings Plan
Aside from giving your child a financial boost towards covering their college expenses, there are a number of benefits to setting up a 529 Savings Plan.
- There is no age restriction, so if your child does not want to attend college immediately after graduation, they’ll still be able to use the funds to cover educational expenses.
- You can enroll at any time. Other plans often place restrictions on when you can open a savings plan. The 529 Savings Plan allows you to establish an account at any time.
- The plan can be used to cover all college-related expenses, from tuition and room and board to textbooks, computers, and other necessities.
The plan is one of the most flexible options and any distributions from the fund are not subject to federal income tax as long as they were used to pay for eligible college-related expenses. Set your child up for success and start saving for college as part of your wealth management strategy. Contact your advisor for more information.