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admin | Category: Improving Erections | 03.09.2014
The price of an education continues to increase and there’s no clear sign that this trend is slowing. You put after-tax dollars into an identified 529 plan where they grow tax free, and then can be withdrawn tax free to pay for tuition, books, room and board and other expenses necessary for successfully completing college. The details of 529 plans offered in each state can vary significantly so be sure you have a clear understanding of the rules that apply in your state. A growing number of states also offer “pre-paid tuition” plans under the umbrella of IRS Section 529. With a pre-paid tuition plan, you’re essentially paying now for tuition later rather than saving in a tax-free account for future withdrawals. If you’re ready to start saving for someone’s college expenses, find out which program(s) your state offers and what you need to do to enroll. Parents or grandparents have a variety of options when it comes to putting money aside for their children and grand children’s college education. Roth IRA’s are a great way to save for retirement, but can also be a good tool to covering college expenses.
For most folks who are sending their kids off to college, only the contribution portions of their Roth IRA balances can be withdrawn tax-free.
This means that a person who has contributed $5,000 a year for five years can withdraw $25,000 tax free if it is used for a qualifying educational expense, which includes room board, books, and tuition. Scott Hansen of CNBC News reports that his favorite thing about the Roth IRA is the flexibility it offers compared to a 529 plan.
The most popular college savings option is the 529 plan, which does have great benefits and should be considered.
The tax code provides two primary advantageous ways of saving for your children’s education.

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These plans can be of tremendous benefit if you think your plan’s beneficiary will be attending a school in the state in which you currently reside.
Some of the benefits of these plans are lost if the beneficiary attends an out-of-state school, but they can still be an important and secure way to save for college. We are not responsible for the content or security of any third-party link published on Colonial Wallet Wisdom. One way is a 529 plan, but another way that may be overlooked is a Roth individual retirement account.
A 529 plan can only be used to pay for expenses related to college; Roth IRA’s can be used for college expenses and as a retirement income.
The maximum contribution in 2014 was $5500 or $6500 for those over 50 years old.  Also, in order to contribute to a Roth IRA you have to have an income, which makes it impossible for retirees to use and those people with high incomes are banned from using this tax tool, a single taxpayer maxes out at $114,000 while a married couple is $181,000. However, many Americans should also look into the Roth IRA as an option for college savings. We frequently get questions about the differences between the programs and about which program is best-suited for a family’s particular needs. If then answer is yes, then you want to start savings now – and section 529 can offer the vehicle you need to save.
A Roth IRA allows those who have funds left over after college expenses to switch the money to a retirement income, with no tax penalties.
But for the millions who live in the eight states that don’t offer this tax break—including California, Massachusetts and New Jersey—the Roth IRA is both a terrific and flexible alternative. The Coverdell Education Savings Account and the Qualified Tuition Plan (frequently referred to as a Sec 529 Plan) are similar; neither provides tax-deductible contributions, but both plans’ earnings are tax-free if used for allowable expenses, such as tuition.

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Therefore, with either plan, the greatest benefit is derived by making contributions to the plan as soon as possible—even the day after a child is born—so as to accumulate years of investment earnings and maximize the benefits. The contributions can be made by anyone, including the beneficiary, so long as the contributor’s adjusted gross income is not high enough to phase out the allowable contribution.
Although the funds can be used starting in kindergarten, the chances are that not enough of earnings will have been accumulated by that time to provide any significant benefit. On the other hand, state-run Sec 529 plan benefits are limited to postsecondary education, but they allow significantly larger amounts to be contributed; multiple people can each contribute up to the gift tax limit each year. A special rule allows contributors to make up to five years of contribution in advance (for a total of $70,000 in 2015). 529 Plans allow taxpayers to put away larger amounts of money, limited only by the contributor’s gift tax concerns and the contribution limits of the intended plan. There are no limits on the number of contributors, and there are no income or age limitations.
The maximum amount that can be contributed per beneficiary is based on the projected cost of college education and will vary between the states’ plans. Generally, once an account reaches that level, additional contributions cannot be made, but that doesn’t prevent the account from continuing to grow. Which plan (or combination of plans) is best for your family depends on a number of issues, including education goals, the number and ages of your children, the finances of your family and of any grandparents or other relatives willing to help, and a number of other issues.

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