College Savings Account - 529 College Savings Plans

Besides investing in a Coverdell ESA account, there is another popular alternative to saving funds for college.  A 529 Savings plan is offered by either your state or an institution of higher education.  Withdrawals and earnings from 529 savings plans are generally tax free as long as the withdrawn funds are being used for "qualified educational expenses" like books, tuition, room and board, and supplies.  Contributions may also be partially tax deductable depending on your state.  One of the greatest strengths that a 529 plan has over a Coverdell ESA is that there are no income based restrictions on contributions.  Another strength of 529 plans is that many plans are managed for you.  So if you don't have to worry about the risk of wisely investing your funds if you're not a savy investor, all of this will be taken care of for you.  However, as with all investments, there are risks associated with 529 plans.  Your best bet is to request information directly from you plan's administrators.


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