Section 529 Plans

A 529 plan is the best available strategy for saving for college as most financial advisors will tell you. These plans offer superior tax breaks and more control that other education accounts. Every state offers at least one 529 plan. Both residents and non-residents may enroll in a plan. Some educational institutions also offer 529 plans.

Most 529 plans fall into two categories: prepaid tuition plans and college savings plans. Both are effective tools for saving for college but achieve this goal through different means.

Prepaid Tuition Plans
These plans allow you to pay for future college credits at today's prices.

College Savings Plans
These plans allow accounts to grow faster than the tuition rate.

One misconception about 529 plans is that students must attend either a college within their home state or with the state sponsoring the plan. This is not true; enrollment in a 529 plan allows students to attend nearly any public, private or out-of-state school.

Advantages of 529 plans

The benefits of 529 plans are numerous and include the following:

Disadvantages of 529 plans

With so many incentives, the disadvantages of 529 accounts are fairly acceptable.