College Savings
4:07 pm
Wed May 28, 2014

5/29 Day Highlights College Savings Plans

Bob Barrett explains 529 plans for prepaid college.
Example of savings growth in a 529 account.
Credit www.myfloridaprepaid.com

5/29 is today's date. It's also the name of a savings plan to help save for a college education. 529 College Savings Plans are named after the chapter in the federal tax code that created them, and they allow families to save for a college education with federal tax benefits. All a person needs to have an account opened for them is a social security number. 

The College Savings Plan Network has designated May 29th, 5/29, as National 529 College Savings Day to highlight the importance of saving for college. The accounts can be opened anytime and can be as large or as small as you like.

529 savings accounts are similar to 401K accounts in that the value of the accounts grow tax free. Unlike your retirement account, you contribute after-tax dollars to the 529s so when it's time to withdraw money for college all the withdrawals are tax free. So if you have $20,000 saved for college, every penny goes for that education with no tax consequences.

Kristin Lock from the Florida Pre-Paid College Board says according to a recent study published in the Wall Street Journal the class of 2014 is the most indebted graduating class in history, owing an average of $33,000 per student in student loan debt. "Even accounting for inflation" said Lock, "that's double the amount that people had to pay back 20 years ago".

And one quick note about the State Of Florida- today we are talking about 529 savings plans, not the pre-paid plan, and while the Florida PrePaid option is a 529 not all 529s are a prepaid plan.  The savings plans are flexible and can be started any time during the year. 

Accounts can be opened for any child at any age and you can even open one for yourself if you plan on returning to school in the future. They can also be used for school in in any state, it's not limited to the state where the plan was purchased.

To learn more about college savings you can go to www.myfloridaprepaid.com or call 800-522 GRAD.