Why Contributing to a 529 Plan Should Be at the Top of Your To-Do List

Contributing to your child’s future has many financial benefits.

Whether your child is 9 months or 5 years, I implore you to consider opening a 529 Plan and start contributing consistently. Looking for the best possible way to fund your child’s education should be at the top of your to-do list for many reasons — The cost of college increased by more than 25% in the last 10 years. The price of college is increasing 8x faster than wages. Further, due to COVID impacts like teacher shortages, remote learning, and funding shortages, parents are moving their kids to private schools at an exponential rate. Also, you may be surprised to learn there are many financial benefits to opening a 529 Plan for your child. I explore several below.

Pay for qualified education expenses with tax-free money

Your 529 Plan can be withdrawn tax-free to pay for qualified higher education expenses like tuition, fees, books, and computers. Additionally, your earnings grow tax-free. You may withdraw up to $75,000/year per beneficiary ($150,000 for married couples) for qualified expenses. There are some unqualified expenses commonly assumed to be qualified like travel, personal living expenses, and test-prep courses.