The 529 College Savings Plan is one of the best options when you want to save for your child’s college expenses. However, with over 100 529 plans to choose from picking the right one can be challenging.
These few tips will help you pick the right 529 college savings plan for your family:
Find out if your home state offers an income tax deduction for contributions to the state’s plans
Contributions to a 529 plan are not eligible for federal income tax deductions but some states offer an income tax deduction if you contribute to the state’s plan.
Do your homework on the fees and other investment options
In some cases, the income tax deduction is outweighed by exorbitant processing fees and the lack of good investment options. Before you sign up for your state’s 529 plan, find out how much you will have to pay by way of fees, and also look for higher-quality, lower-cost investment opportunities.
Explore out-of-state plans
You are free to choose any state’s 529 plans. If your home state does not offer an income tax deduction, or if their plan is very expensive, take time to look into the plans offered by other states and choose one that offers you the best deal.
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