What are the benefits of a 529 plan?

One of the benefits of 529 plans is the tax-free earnings that grow over a period of time. The longer your money is invested, the more time it has to grow and the greater your tax benefits. You will lose some of these potential benefits if you withdraw money from a 529 plan account within a short period of time after it is contributed.

Do all states offer tax breaks for 529 plans?

If you invest through a 529 plan, you may even be able to get a tax deduction on your state income taxes. Not all states offer a tax break on your contributions, however, and you won’t get a tax benefit in a state where you don’t pay taxes. So, choose carefully.

How do I choose the best 529 plan for my needs?

“Before choosing a 529, investors will want to evaluate a 529’s investment options to see how these investments have performed,” says Van Sant. Be sure to look at what investment options are available and how much they cost. Good investment options allow you to maximize your potential return and minimize your costs.