Today is 5/29 Day – a day for good reminder that it is never too early to start saving for a loved one’s college education! 529 college savings plans are a way that families can start saving money today for future college costs. It gets its name from the federal tax code, section 529.
Most parents want their children to have every advantage available, and a college education usually helps. Since the price of college isn’t going down, it makes sense to do a little research when it comes to funding your child’s education.
What is a 529 Plan?
The 529 college savings plans work by making contributions of after tax dollars into the account. The funds are then invested and have the opportunity to grow tax deferred. When it is time for your little ones to go off to college, you can then take the funds out completely tax free as long as the funds are going to an accredited school and used for a qualified expense. Qualified expenses appear to be tuition, certain room and board costs as well as mandatory books, fees, and computer accessories.
How do 5/29 plans work in Minnesota?
Minnesota’s 529 program is called Minnesota College Savings Plan. The Minnesota Plan makes it easy for families to save for college. Accounts can be opened online on their website at ww.mnsaves.org. They also have a lot of information available right there on their site, including some valuable planning tools. Contributions can be flexible and made on your own schedule, but it is possible to have monthly contributions established so you don’t have to think about it. Also, each contribution can be as little as $25! This is a very manageable way to start saving for college without it becoming a burden.