What is a 529 college savings plan?

Also known as 529 college savings plans, these are tax-advantaged investment accounts designed for education savings. They work much like a Roth 401 (k) or Roth IRA by investing your after-tax contributions in mutual funds or similar investments. 529 plans offer several investment options from which to choose.

Is a 529 plan a good idea for college?

A 529 plan can be a smart way for you to start saving early for your child’s college education. Still, while every state offers a plan, they are not all the same. The best 529 plans charge the lowest fees and offer a better selection of investment options. Read on to learn more about saving for college, along with 529 plan pros and cons.

What is the difference between a tax-deferred and a 529 plan?

Marginal tax bracket Unlike the tax-deferred 529 plan, enter the tax rate you would pay on any earnings in an alternative taxable college savings account. This rate will be used for comparison purposes. At CalcXML we are aware of the need to plan ahead, so we developed a user friendly 529 college savings plan calculator.