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The Pros of a 529 Plan 

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Before you invest in any sort of college savings plan, you might want to consider the pros and cons that it provides. The information here could help you as you consider using a 529 plan to have college funds for your child.

The benefits of a 529 plan

Here are some good reasons to invest in a 529 college plan for our child’s college fund:

529 College Saving plans are a great way to ensure that your child can get a good education.

529 plans are tax-deferred investments
When you invest in a 529 college savings plan, your withdrawals will probably be tax-free. It’s always smart to check IRS Publication to be sure. Until now, this tax-free provision was made to expire in 2010, but, thanks to current changes to the law, it seems to be an advantage that will be around for years.

Your account grows interest
529 plans work like mutual funds. Some states’ plans might work differently, but most invest your money in stocks and bonds in the chance that it will grow faster than a regular bank savings account. Most plans do a very solid job of managing your money.

An automatic investment option
Many plans provide an automatic investment choice which lets the 529 college plan take out a certain amount of money every month from your checking or savings account. You decide the amount and better yet, you get to enjoy hands-free investing that aids in preventing you from spending your money on something else. You will have money in the bank!

You can contribute as much as you want
College savings 529 plans let you put in as much money as you want. Pre-paid tuition plans, sadly, do not. They limit the amount of money you can put in annually the same as an IRA. While unlimited savings sounds wonderful, be cautious not to put yourself into a corner by saving too much.