The 529 plan works much like a Roth 401(k) or Roth IRA, by investing your after-tax savings contributions in mutual funds or similar investments. As those investments grow, so does your 529 savings account. When the time comes distribute the earnings that your account has created, you won’t be charged a federal tax on earnings that are spent on qualified higher education expenses, such as tuition or books.
The 529 plan can be used for an incredible variety of educational opportunities, like elite private colleges, state flagship universities, local community colleges, theological seminaries, trade schools offering culinary or beauty skills training, truck driving schools, and even international schools. In short: your child isn’t locked into a specific educational path from a young age.
The 529 plan has other advantages too. With very few exceptions, you maintain control of the account even after the beneficiary (your child or family member) turns 18. In other words, if they get other ideas about what to do with the money… they’re out of luck without your permission. You aren’t locked into a beneficiary, either. You can change the beneficiary to another family member or use the money to further your own adult education.
You’re also not restricted to the 529 plans offered in your state—you have access to every 529 plan in every state, which often differ on the types of plans they offer. For instance, some states give you the ability to prepay for tuition at qualified institutions—essentially locking in tuition prices at their current level. Think about how much the cost of college has skyrocketed over the last 18 years, and you can start to see why these plans can save a lot of money down the road.
Need a little more motivation to get started? Managing a 529 plan is incredibly easy. Once you’ve selected a plan that works best for you, you can set up regular, automatic deposits into the account, so you don’t even have to think about it unless you want to make a change.
*Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, D/B/A Alaska USA Financial Planning & Investment Services, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America. FR-2957544.1-0220-0322 Exp. 03/18/2022
FR-2339954.1-1218-0121 Exp. 01/05/2021
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