It’s no secret, college is becoming increasingly expensive every year. If you are a new parent, the idea of saving for your young child’s college education can seem daunting, seeing as college costs are increasing on average by 3.5% a year. Luckily, there are some options for putting aside money for college.
You can plan ahead now by opening a traditional savings account. While this is good and will allow you to save for the future, there are better options available to you for saving for college. Your best bet is to open a 529 College Savings Plan. What makes a 529 College Savings Plan different than a traditional savings account?
- Earnings from a 529 plan grow federal tax-free, and the money is not taxed when it is taken out to pay for college. Other means of saving may have their earnings taxed, and will have capital gains tax taken out when money is withdrawn.
- You get to stay in control of the account. If you open the account for your child, you are still in control and decide how to money is used when it comes time to pay for college.
- 529 College Savings Plans are very low maintenance accounts, and only require you to contribute, then you can set it and forget it.
- Anyone can open a 529 College Savings Plan. There are no income limits, age limits, or annual contribution limits to a 529 plan.
To see if a 529 College Savings plan is right for you, or to speak with a member of our Wealth Management & Financial Services Team, please contact us today to set up an appointment! To schedule an initial consultation, call 402-434-2265 or 800-837-4481 and ask for the Wealth Management department. You can also request an appointment while visiting any one of Cornhusker Bank’s branch locations.
Investments in 529 plans involve risks to principal and may involve additional fees such as enrollment charges and annual maintenance fees. 529 plans offer no guarantees. Depending on your state of residence and the state of residence of the beneficiary, the plan may or may not be eligible for state tax benefits. There are exceptions to the gift tax and estate tax exemptions; please contact a qualified tax, legal or financial advisor for more information prior to investing.