529 Plans Help More Americans Prioritize Colleges Savings in Financial Planning

Hook Law Center (formerly Oast & Hook)

Virginia Beach, VA (Law Firm Newswire) November 13, 2014 – Parents and grandparents who want to incorporate college savings into their financial planning can do so with a 529 college savings plan, a special savings account designed for higher education expenses.

“In this era of ever-rising tuition, college savings should take higher priority than in the past,” said Andrew Hook, an estate planning attorney in Franklin, Virginia. “A 529 plan can be a part of that financial planning.”

A 529 savings account allows account holders to save money over time, then withdraw from the balance tax-free for education-related expenses. Qualified educational expenses include tuition, fees, books, room and board, and required supplies.

There is no minimum contribution, so families can save more when they are able and less during lean years. In Virginia, residents who contribute to a Virginia 529 plan can deduct up to $4,000 from their state income tax return.

After setting up a 529 savings account, account holders should work out an investment and savings plan. Often, it is beneficial to choose a plan with simple investment options, which can make choosing and sticking with an investment method effortless.

Families might begin by saving small amounts from cash or debit purchases each week. This can be an especially strong technique for those who feel unable to start by dedicating a lump sum each month. Alternatively, families could set an automatic deposit for the account each month. The deposit should be within budget so that it will be manageable even in lean months.