Benefits of 529 Plans

The coronavirus changed the lives of many college students who had to return home to learn remotely. At the same time, many students and their parents lost jobs or had wages reduced as part of the virus’ economic fallout, impacting the ability to save and pay for college.
Many people do not realize that one of the lesser-known uses of 529 plans is helping families retool skill sets in midcareer training, career acceleration, and time away from the job market.529 plan
The two main benefits of 529 plans are they provide tax-free growth and tax-free withdrawals for qualified education expenses, including tuition, room, board, fees and books. The money also can be used to upgrade technology such as computers, laptops, printers, internet service, and some software. All of these have become essential for many college students taking online classes.
As you rethink your job prospects and look to overhaul skill sets, your student(s) and even you as a parent can use 529 funds for graduate schools or apprenticeships: Eligible graduate schools must participate in the federal student aid programs, and apprenticeship programs must be registered and certified with the U.S. Department of Labor.
A Fresh Look
Think of a 529 plan as a career emergency fund that offers job protection or job acceleration, since higher levels of education are correlated with higher levels of income and lower levels of unemployment. Such plans can be used not only for you and your children, but the next generation (i.e., parents, grandparents, aunts, and uncles).
If you are struggling with debt, you can pay off up to $10,000 a year in qualified student loans with 529 funds. You can use the money in your account to pay up to $10,000 a year for tuition for your child’s private school. There are some limitations and it is important to speak with a financial professional before taking a distribution.
From a tax and investment perspective, staying the course by starting early and staying invested is the most optimized way to use 529 accounts. These tax-advantaged investment accounts offer various options to get more money for college.
You can still see 529 plans as ways to accumulate money and withdraw it tax-free for education-related expenses by taking advantage of the two types of 529s. There are prepaid tuition plans and college savings plans, with dozens of individual options, varying in terms of requirements and eligibility.
The first step is to evaluate your state’s plan. You may be eligible for additional state tax benefits and some states offer a matching program.
The flexibility of 529 plans are useful if a child does not need the full amount due to scholarships. It may be possible to transfer the funds to a sibling or another relative.
Work with a financial professional to see how a 529 plan can help with your plans.

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